While Section 80G offers tax benefits for charitable donations, the deduction is allowed only when specific rules and restrictions are followed. Many deduction claims fail not because the donation itself is invalid, but because one or more statutory conditions are overlooked.
This article explains the most important rules, restrictions, and disallowance scenarios under Section 80G, helping taxpayers avoid common mistakes and ensure compliance.
1. Only Monetary Donations Are Allowed
One of the most fundamental rules under Section 80G is that only monetary donations qualify for deduction.
This means:
Donations in kind, such as food, clothing, medicines, or services, are not eligible
Even if the institution is registered under Section 80G, non-monetary contributions do not qualify
The law restricts deductions to monetary donations to ensure valuation accuracy and auditability.
2. Cash Donation Limit u/s 80G
Section 80G places a strict restriction on cash donations.
No deduction is allowed for cash donations exceeding ₹2,000
Donations above this amount must be made through non-cash modes such as banking or electronic payments
If a donor makes a cash donation beyond the prescribed threshold, the entire amount becomes ineligible, not just the excess.
3. One Donation, One Deduction Rule
Section 80G follows a clear compliance principle: “A donation claimed as a deduction under Section 80G cannot be claimed again under any other section of the Income Tax Act“.
This rule prevents duplication of tax benefits. Once a donation is claimed under Section 80G:
It cannot be claimed under any other provision
It cannot be claimed again in a different assessment year
4. No Deduction for Donations in Religious Nature
The law draws a distinction between charitable and religious activities.
Donations made to institutions or activities that are wholly or substantially religious in nature do not qualify under Section 80G
Institutions benefiting a particular religion or caste are excluded
This restriction ensures that Section 80G remains focused on secular and public charitable purposes.
5. No Carry Forward of Excess Donation
A common misconception among taxpayers is that unused donation amounts can be carried forward. Section 80G does not allow carry forward. This means:
Excess donation beyond qualifying limits is ignored
Donations cannot be carried forward to future years
Deductions are allowed only in the year of donation
Timing and planning of donations therefore become important.
6. Donation Must Be Made to a Valid 80G-Approved Institution
Even if a donation is genuine, the deduction will be denied if the donee institution:
Is not registered or approved under Section 80G
Has an expired or cancelled approval during the relevant year
Fails to comply with prescribed conditions
It is the donor’s responsibility to verify the approval status of the institution at the time of donation.
7. Impact of Cancellation or Expiry of 80G Registration
If a donee institution loses its 80G registration:
Donations made after cancellation or expiry are not eligible
Donations made during the valid approval period remain eligible
This makes it critical for donors to check the validity period of the institution’s approval.
8. Reporting and Data Matching Requirements
Under the current compliance framework, certain donee institutions are required to submit prescribed statements to the Income Tax Department containing donor details. As a result:
The donor’s claim must match the information submitted by the donee
Any mismatch may lead to disallowance or further verification
Incomplete or incorrect details can result in denial of deduction
Accuracy in donor information is therefore essential.
9. Deduction Not Allowed Under the New Tax Regime
Taxpayers opting for the new tax regime under Section 115BAC cannot claim deduction under Section 80G. This restriction applies regardless of:
The donation amount
The category of donation
The eligibility of the institution
Choosing the tax regime is therefore a critical decision before planning donations for tax purposes.
10. Deduction Allowed Only Once Per Donation
Section 80G explicitly prohibits claiming deduction:
More than once for the same donation
In multiple years
Under multiple sections
Any such claim is considered invalid and may attract scrutiny.
Common Scenarios Where Deduction Is Disallowed
A Section 80G claim may be rejected if:
Donation is made in kind
Cash donation exceeds ₹2,000
Institution is not approved or approval has lapsed
Claim is made under the new tax regime
Donation details do not match donee reporting
Excess donation is claimed beyond limits
Understanding these scenarios helps avoid unnecessary disputes.
Key Takeaways
Section 80G deductions are rule-driven and compliance-based
Only monetary, traceable donations qualify
Cash donations above ₹2,000 are disallowed
No carry forward of excess donations
Verification and reporting accuracy are crucial
New tax regime disallows Section 80G deduction
In the next/final article in this series, we will explain how to claim Section 80G deduction while filing the Income Tax Return, including documentation and reporting requirements,
Reference:
Income Tax Department’s FAQs on Section 80G Deduction dated 18/12/2025