Understanding 80G Donation Limit for Salaried Person: Tax Benefits & Deductions

In India, charitable giving has always been a part of our culture, and the Income Tax Act supports this spirit through tax benefits. One of the most valuable provisions is Section 80G, which allows individuals to claim deductions on donations made to eligible organizations. For salaried employees, understanding the 80G Donation Limit for Salaried Person is essential, as it helps in effective tax planning while also contributing to noble causes.

What is Section 80G?

Section 80G of the Income Tax Act provides deductions for donations made to approved charitable institutions, relief funds, and non-profit organizations. This deduction reduces taxable income, ultimately lowering tax liability. However, the amount of deduction depends on the nature of the donation and the organization receiving it. Knowing the 80G Donation Limit for Salaried Person ensures that you donate wisely while maximizing your tax benefits.

Eligibility for 80G Deduction

Not all donations qualify for deductions under Section 80G. To claim the benefit:

• Donations must be made to government-recognized charitable organizations.

• Donations should not be in cash exceeding ₹2,000 (payments must be through cheque, draft, or digital modes).

• Only voluntary donations are covered; contributions like CSR (Corporate Social Responsibility) expenses are excluded.

This makes it important for salaried individuals to verify the eligibility of the institution before donating to utilize the 80G Donation Limit for Salaried Person fully.

Deduction Categories under Section 80G

The amount of deduction available can be:

1. 100% deduction without limit – For certain national funds like the Prime Minister’s National Relief Fund.

2. 50% deduction without limit – For specific charitable funds and trusts.

3. 100% deduction subject to 10% of adjusted gross total income (AGTI) – For institutions promoting family planning or government-approved causes.

4. 50% deduction subject to 10% of AGTI – For most other eligible institutions.

For a salaried person, the 80G Donation Limit for Salaried Person often applies under the 10% of AGTI category. This means donations exceeding 10% of your adjusted gross total income will not be eligible for further deductions.

Example of Calculation

Suppose your adjusted gross total income is ₹8,00,000, and you donate ₹1,00,000 to an approved NGO eligible for 50% deduction with limit. The maximum deduction cannot exceed 10% of AGTI (₹80,000). Therefore, eligible deduction = 50% of ₹80,000 = ₹40,000. This simple calculation explains why understanding the 80G Donation Limit for Salaried Person is crucial.

Why Salaried Persons Should Use 80G

• Tax Savings: Reduces taxable income significantly.

• Social Impact: Supports NGOs, relief funds, and social development projects.

• Financial Planning: Aligns charitable giving with yearly tax-saving goals.

Final Thoughts

For every salaried employee, charitable donations not only provide social satisfaction but also offer financial advantages. Knowing the 80G Donation Limit for Salaried Person helps in making informed decisions about where, how much, and in what manner to donate. Always ensure you collect a valid receipt and the organization’s 80G registration details to claim your deduction smoothly while filing income tax returns.