Section 80G of ITA, 1961 : Section 80G: Deduction In Respect Of Donations To Certain Funds, Charitable Institutions, Etc

Explanation using Example

Imagine that Mr. Sharma, a salaried individual, has a total income of ₹800,000 for the financial year. He decides to donate ₹50,000 to the Prime Minister's National Relief Fund (PMNRF) and ₹20,000 to a local government school for building a new library. Both the PMNRF and the local government school are eligible institutions under Section 80G of the Income-tax Act, 1961.

According to Section 80G, Mr. Sharma can claim a deduction for these donations when computing his taxable income. Since the PMNRF is listed under sub-section (2)(a)(iv), Mr. Sharma is eligible to claim a 100% deduction for the ₹50,000 donation. For the ₹20,000 donation to the local government school, he can claim a 50% deduction, which amounts to ₹10,000.

Therefore, Mr. Sharma's total deductible amount under Section 80G will be ₹50,000 (for PMNRF) + ₹10,000 (50% of ₹20,000 for the school), which equals ₹60,000. This deduction will reduce his taxable income from ₹800,000 to ₹740,000 for that financial year.