Not every charitable donation qualifies for a tax deduction. Under Section 80G of the Income Tax Act, 1961, only donations made to specified funds, institutions, or purposes are eligible for deduction. Even among eligible donations, the extent of deduction varies depending on how the law classifies the donation.
This article explains which donations are eligible under Section 80G and how they are grouped into 100% or 50% deduction categories, with or without qualifying limits. It focuses entirely on classification, not on eligibility of donors, calculation formulas, or filing procedures.
Where Eligibility of Donations Is Defined in Law
The eligibility of donations is governed primarily by Section 80G(2) of the Income Tax Act. This provision contains a detailed list of:
Government funds and national funds
Approved charitable institutions
Government or local authorities using funds for charitable purposes
Certain notified purposes and activities
Only donations falling under these categories are considered for deduction. Donations made outside this framework, regardless of how noble the cause may be, are not eligible under Section 80G.
Broad Classification of Eligible Donations
Section 80G groups eligible donations into four broad categories, based on two criteria:
Percentage of deduction allowed (100% or 50%)
Whether a qualifying limit applies or not
This classification determines how much of the donated amount can be considered for deduction.
1. Donations Eligible for 100% Deduction Without Any Limit
This is the most beneficial category under Section 80G. Donations in this group:
Qualify for full (100%) deduction
Are not subject to any qualifying limit
Are typically linked to national importance or government-notified funds
These include donations made to certain funds set up by the Central or State Government for national relief, welfare, or emergency purposes.
Because of their nature and purpose, the law allows the entire donation amount to be deducted while computing taxable income, without linking it to the donor’s income level.
2. Donations Eligible for 50% Deduction Without Any Limit
In this category:
Only 50% of the donated amount is eligible for deduction
There is no upper limit linked to income
These donations are generally made to specific funds notified in the law that are considered eligible but do not qualify for full deduction. Even though the entire donation is recognised, the deduction is restricted to half of the amount donated.
3. Donations Eligible for 100% Deduction Subject to Qualifying Limit
This category combines full deduction with an overall ceiling. Here:
100% of the eligible donation can be considered
But the total deduction is subject to a qualifying limit, which is linked to the donor’s income
Donations in this category typically include:
Contributions made for specific government-approved purposes
Certain corporate donations for notified activities
If the donation exceeds the qualifying limit, the excess amount is ignored for deduction purposes.
4. Donations Eligible for 50% Deduction Subject to Qualifying Limit
This is the most restricted category under Section 80G. In this case:
Only 50% of the donation amount is eligible
The deduction is also subject to the qualifying limit
Many donations to approved charitable institutions, government bodies, or local authorities for general charitable purposes fall under this category. The deduction is therefore affected by both:
The reduced percentage, and
The income-linked cap
Understanding the Concept of “Qualifying Limit”
For certain categories of donations, Section 80G places a cap on the total deduction allowed. This cap is expressed as a percentage of the donor’s adjusted income.
While the calculation of this limit is explained in a separate article, it is important to understand the concept here:
Donations subject to the qualifying limit are aggregated
The deduction is allowed only up to the prescribed ceiling
Any amount beyond this ceiling does not provide tax benefit
This mechanism ensures balance between encouraging donations and preventing excessive reduction of taxable income.
Special Funds vs Other Eligible Institutions
Section 80G makes an implicit distinction between:
Special funds, which are usually government-notified and linked to national priorities, and
Other eligible institutions, which may include approved trusts, authorities, or organisations engaged in charitable activities
Special funds are generally placed in more favourable deduction categories, while other institutions are often subject to limits and partial deductions.
Donations That Do Not Qualify u/s 80G
Even if a donation is charitable in nature, it will not qualify under Section 80G if:
The fund or institution is not listed or approved under Section 80G
The donation is made for religious activities that are wholly or substantially religious
The contribution is made in kind rather than in money
Understanding what is excluded is as important as understanding what is eligible.
Importance of Verifying the Donation Category
Before assuming a tax benefit, donors must:
Identify the correct category of the donation
Understand whether the deduction is 100% or 50%
Check whether a qualifying limit applies
The deduction category is defined by law and cannot be chosen or altered by the donor or the institution.
Key Takeaways
Eligibility of donations under Section 80G is defined in Section 80G(2)
Eligible donations are classified into four categories
Deduction may be 100% or 50%, with or without qualifying limits
Special funds generally receive more favourable treatment
Donations outside the notified framework do not qualify
In the next article, we will explain how deductions under Section 80G are calculated, including the concept of adjusted income and qualifying limits.
Reference:
Income Tax Department’s FAQs on Section 80G Deduction dated 18/12/2025