Section 80G donations: 100%/50% categories, Rs 2,000 cash cap, and the 80G(5)(vi) certificate check

Donation receipts arrive in inboxes through March, and the assumption is that every rupee is deductible. It is not. Section 80G of the Income-tax Act, 1961 carves donations into four categories, denies any cash gift above Rs 2,000, refuses in-kind gifts entirely, and is shut off completely for anyone filing under Section 115BAC's new tax regime. The Central Board of Direct Taxes (CBDT) tightened the framework again in FY 2021-22 by forcing every charitable trust to re-register under Sections 12AB and 80G via Form 10A/10AB, with a five-year renewal cycle that quietly invalidated lakhs of stale 80G certificates. This Morning Tax Tip walks through the statute, runs a worked example, lists the scrutiny pitfalls that the e-verification scheme is now flagging, and answers the questions readers ask most often.

What the Section Says

Section 80G allows a deduction from gross total income (GTI) for donations to specified funds, charitable institutions, and government schemes notified by the Central Government. The deduction operates on four parameters: (a) the category of the donee, (b) the percentage allowed (50% or 100%), (c) whether the donation is capped at 10% of adjusted gross total income (AGTI), and (d) compliance with sub-section (5D) on cash limits and sub-section (5)(vi) on donee registration. Section 80G is a Chapter VI-A deduction, which means Section 115BAC(1A) — the default new regime from FY 2023-24 — disallows it. Only filers who opt out of the new regime using Form 10-IEA can claim 80G.

The four buckets are codified in sub-section (1) read with sub-section (2):

AGTI under Section 80G(4) is GTI reduced by (i) long-term capital gains, (ii) short-term capital gains taxable under Section 111A, (iii) income taxable under Sections 115A to 115AD, and (iv) all Chapter VI-A deductions other than 80G itself. The 10% ceiling applies only to the aggregate of category C and category D donations.

Sub-section (5D), inserted by the Finance Act 2017 with effect from 1 April 2017, denies the deduction for any cash donation exceeding Rs 2,000 (the earlier threshold was Rs 10,000). Gifts of clothes, food, medicines, or articles do not qualify either — only money is deductible.

Finance Act 2020 inserted Section 80G(5)(viii) and (ix), which from FY 2021-22 require every donee to file an annual statement of donations in Form 10BD and issue a donation certificate in Form 10BE to each donor by 31 May of the following financial year. The donation then auto-populates in the donor's Annual Information Statement (AIS) — and if Form 10BE is missing, the deduction is denied at processing under Section 143(1).

Worked Example

Meet Priya, a salaried resident in Bengaluru filing under the old regime for FY 2025-26 (AY 2026-27). Her salary is Rs 14,00,000, she has interest income of Rs 60,000 from a fixed deposit, and she has claimed Rs 75,000 standard deduction, Rs 1,50,000 under Section 80C, and Rs 50,000 under Section 80CCD(1B) for NPS (a deduction available only under the old regime — the new regime does not allow 80CCD(1B)). Long-term capital gains on listed equity are Rs 90,000. Her donations during the year:

• Rs 50,000 by net-banking to PM CARES Fund (Category A — 100%, no limit)
• Rs 30,000 by UPI to a local school registered under Section 80G(5)(vi) (Category D — 50% with 10% AGTI cap)
• Rs 5,000 cash to a temple trust with valid 80G registration (Category D, blocked by sub-section 5D)
• Rs 12,000 worth of blankets donated to an NGO (in-kind, blocked)

Step 1 — compute Gross Total Income (GTI):

Step 2 — compute Adjusted GTI for Section 80G:

• Start with GTI: Rs 14,75,000
• Less LTCG under Section 112A: Rs 90,000
• Less 80C: Rs 1,50,000
• Less 80CCD(1B): Rs 50,000
• Adjusted GTI = Rs 11,85,000

Step 3 — apply the four-bucket logic:

• PM CARES Rs 50,000 — Category A: full Rs 50,000 deductible.
• School donation Rs 30,000 — Category D: 50% = Rs 15,000, subject to 10% of AGTI = Rs 1,18,500. Rs 15,000 is well within the cap, so Rs 15,000 deductible.
• Cash temple donation Rs 5,000 — blocked by sub-section (5D) because it exceeds Rs 2,000 in cash. Deduction = nil.
• Blankets to NGO — blocked because it is not a money donation. Deduction = nil.

Total 80G deduction = Rs 50,000 + Rs 15,000 = Rs 65,000. Priya's total income falls to Rs 12,10,000, with LTCG of Rs 90,000 taxed separately under Section 112A. Compared with claiming Rs 35,000 (a common spreadsheet error where the cash and in-kind gifts are wrongly added), the correct claim is higher by Rs 30,000 on the category-A side, saving Rs 9,360 at a 30% marginal rate plus 4% cess. Run your own salary through the income tax calculator and the old-vs-new regime calculator before locking the figure.

Common Mistakes

The e-verification scheme rolled out by CBDT under Section 135A is automating cross-checks between Form 10BE filings by donees and 80G claims by donors. The following failure modes are showing up most often in intimations under Section 143(1)(a).

Claiming 80G under the new regime. Section 115BAC(2)(i) disallows 80G. The only Chapter VI-A deductions surviving the new regime are 80CCD(2) (employer NPS), 80CCH (Agniveer Corpus Fund), 80JJAA (employer hiring), and Section 80M (inter-corporate dividend) for companies. If you forgot to file Form 10-IEA opting out by the Section 139(1) due date, your 80G claim will be disallowed at processing.

Cash donations above Rs 2,000. Sub-section (5D) is absolute. You cannot split a Rs 10,000 cash gift into five Rs 2,000 receipts on different dates — the CIT(A) has held in multiple orders that substance governs. Donations above Rs 2,000 must move through bank transfer, UPI, cheque, demand draft, or card.

Missing Form 10BE. From FY 2021-22, the donee files Form 10BD by 31 May and issues Form 10BE with a unique donation reference number. If you cannot produce Form 10BE, the assessing officer treats the 80G claim as unsubstantiated. Save the PDF; the donee's website receipt alone is not enough.

Donee with expired 80G registration. The 12AB and 80G re-registration via Form 10A/10AB has five-year validity. A trust whose 80G registration lapsed and which has not filed Form 10AB by six months before expiry cannot pass through a deduction. Verify the donee's current 80G certificate on the income-tax portal's "Tax Exemption Institutions" search before donating.

Counting LTCG inside AGTI. A frequent spreadsheet bug — auditors who don't subtract Section 112A LTCG and Section 111A STCG from GTI overstate the 10% cap and end up with a deduction that the CPC reduces at processing.

Donations to political parties parked under 80G. Political-party donations belong under Section 80GGC (individuals) or 80GGB (companies), not 80G. Mixing them up triggers a mismatch with the political-party register filed under Section 29C of the Representation of the People Act.

FAQ

Can I claim 80G if I have already filed under the new regime?

No. Section 80G is excluded by Section 115BAC(2)(i). If the new regime is your default and you want to use 80G, you must opt out by filing Form 10-IEA before the Section 139(1) due date — typically 31 July for non-audit individuals. Use the old-vs-new regime calculator to confirm the trade-off before opting out, because the Finance Act 2025 raised the Section 87A rebate in the new regime to Rs 60,000 (taxable income up to Rs 12 lakh) and the Rs 75,000 standard deduction is now available there too.

What is the maximum 80G deduction in a year?

There is no overall cap. Category A and B donations (100% or 50%, no limit) can be unlimited — donate Rs 5 crore to PM CARES and the full Rs 5 crore is deductible. Category C and D donations together cannot exceed 10% of AGTI, computed before applying 80G itself but after every other Chapter VI-A deduction.

How do I check whether a charity has a valid 80G registration?

Visit the income-tax e-filing portal, go to "Tax Exemption Institutions" under the e-Services tab, and search by PAN or name. The portal returns the current 80G registration number, the date of grant, the expiry date, and the activities approved. From AY 2025-26, every Form 10BE has a unique donation reference number verified against the donee's Form 10BD filing.

Are donations to government-funded schemes always 100%?

No. PM National Relief Fund, PM CARES, Swachh Bharat Kosh, and the National Defence Fund are 100% category-A donations with no qualifying limit. But donations to government or local authority for promoting family planning are category C — still 100%, but capped at 10% of AGTI. The category is mentioned on the Form 10BE certificate.

Can NRIs claim 80G?

Yes, an NRI can claim 80G on Indian-source income offered to tax in India, provided the donee is an Indian institution with valid 80G registration and the NRI opts out of the new regime by filing Form 10-IEA. Two carve-outs: Swachh Bharat Kosh and Clean Ganga Fund are residents-only. Donations to PM CARES and PM National Relief Fund are open to NRIs.

Does 80G interact with Section 87A rebate?

Yes. The 87A rebate is computed on total income after all Chapter VI-A deductions, including 80G. In the old regime, the rebate is Rs 12,500 for total income up to Rs 5,00,000. An 80G claim that pushes total income below Rs 5,00,000 can unlock a Rs 12,500 rebate that was otherwise unavailable. Compute net tax using the income tax calculator once the 80G figure is locked.

What records must I keep, and for how long?

Keep Form 10BE (the donee's PDF), the bank statement showing the transfer, the PAN of the donee, and a copy of the donee's 80G registration order. Retain these for at least eight years from the end of the relevant assessment year — Section 149 allows reopening up to 5 years and 3 months from the end of the AY for income escaping assessment above Rs 50 lakh. Cross-check the AIS entry before filing.