Taxation · Deductions from Gross Total Income

Deductions for Donations and Contributions under Section 80G and 80GGC

Updated 4 October 2026 · Fact-checked

Donation deductions reduce your total income when you pay to eligible funds, charities, political parties or electoral trusts. Sort each donation by category, drop cash above the limit, compute adjusted gross total income, cap the limited group at 10% of it, apply 100% or 50%, then add up. Political contributions are fully deductible if not paid in cash.

Understand Deductions for Donations and Contributions

A donation is a voluntary payment, so it is not a cost of earning income. The law still gives a deduction from gross total income to encourage giving to specified causes. The deduction is under Chapter VIII of the Income-tax Act, 2025, and it is claimed only by an assessee who pays in the tax year and who is under the regime that allows Chapter VIII deductions. Under the default concessional regime for individuals, the donation deduction is not available. It is available under the optional regime where deductions are allowed.

The rate depends on who receives the money. Some recipients give a 100% deduction, others 50%. Within each rate, some donations have no qualifying limit and some are subject to a qualifying limit of 10% of adjusted gross total income. This gives four groups: 100% without limit, 50% without limit, 100% with limit, 50% with limit. Learn which group each named fund falls in from your study material. The exam usually names the recipient, and often states the group in the question itself.

Adjusted gross total income (AGTI) is gross total income reduced by items that do not qualify for this base: long-term capital gains, short-term capital gains on listed securities taxed at a special rate, other special-rate incomes the question tells you to exclude, and the Chapter VIII deductions other than the donation deduction. Follow the question's instructions on what to exclude. The limited donations (100% and 50% groups together) are first capped at 10% of AGTI. Then the rate (100% or 50%) is applied.

The mode of payment matters. A donation to a charity paid in cash of more than ₹2,000 does not qualify. Pay by cheque, draft or electronic mode. Donations in kind (clothes, food, medicines) do not qualify at all. Also, a donation already allowed as a business expense cannot be claimed again as a deduction.

Political parties and electoral trusts need two separate ideas. First, the contributor's deduction: a contribution to a registered political party or an approved electoral trust, paid by any mode other than cash, gets a 100% deduction with no qualifying limit. Any cash payment is not eligible, even a small one. Second, the party's or trust's own income may be left out of its total income under separate provisions. That is a different topic and does not affect your deduction as the contributor.

Finally, total Chapter VIII deductions cannot exceed gross total income, and they are not allowed against income that the law excludes from deduction, such as certain special-rate capital gains. Always read the question for such instructions.

Key rules to remember

Four groups of donations: 100% no limit | 50% no limit | 100% with limit | 50% with limit; Group is decided by the recipient. Typical 100% no limit: National Defence Fund, Prime Minister's National Relief Fund, Swachh Bharat Kosh, Clean Ganga Fund. Typical 50% with limit: Government or local authority for charitable purposes, and other approved charitable funds or institutions. Donations to Government for family planning are in a separate limited category, so check the rate in your study material. For the 50% no-limit group, use the recipients listed in your current study material, or the group stated in the question.
Adjusted gross total income: AGTI = Gross total income − long-term capital gains − special-rate short-term capital gains (listed securities) − other excluded special-rate income − Chapter VIII deductions other than donations; Do not subtract the donation deduction itself. Follow the exclusions the question gives.
Qualifying limit: Qualifying limit = 10% × AGTI; Applies to the total of all donations in the 'with limit' groups, not to each donation separately.
Qualifying amount: Qualifying amount = Lower of (actual eligible donations in the limited groups, 10% × AGTI); Cash above ₹2,000 and donations in kind are left out before this step.
Total deduction: Deduction = (100% no-limit donations) + (50% no-limit donations × 50%) + (100% limited group qualifying amount) + (50% limited group qualifying amount × 50%); If both 100% and 50% donations are subject to the limit, cap their combined total at 10% of AGTI. Then split the capped amount between the 100% and 50% items as the question or study material directs. Allowing the 100% items first is not a statutory rule, so follow the question's instruction.
Cash rule for charities: Cash donation > ₹2,000 → no deduction; Cash of ₹2,000 or less is allowed. Payment by cheque, draft or electronic mode is always acceptable.
Political parties and electoral trusts (contributor's deduction): Deduction = 100% of contribution; no qualifying limit; no cash; Recipient must be a registered political party or an approved electoral trust. This is the contributor's deduction. The exemption of the party's own income is a separate provision. Local authorities and artificial juridical persons wholly or partly funded by the Government cannot claim it.

How to solve Deductions for Donations and Contributions questions

Use the same sequence for every donation problem. Do not compute anything until you have sorted the donations.

1Check the regime. If the individual is under the default concessional regime, the donation deduction is not allowed. Proceed only if the question says old or optional regime, or does not restrict it.
2List every donation with its recipient, amount and mode of payment.
3Remove ineligible items: cash above ₹2,000 for charities, any cash to a political party or electoral trust, donations in kind, and donations already claimed as a business expense.
4Tag each remaining donation as 100% no limit, 50% no limit, 100% with limit, 50% with limit, or political party and electoral trust.
5Compute AGTI: gross total income less long-term capital gains, special-rate short-term capital gains and the other deductions the question requires. Then find 10% of AGTI.
6Add up the limited donations and cap the total at 10% of AGTI. Apply 100% or 50% as the question or study material directs.
7Apply the rates to the no-limit donations and add all the groups together. Show each group on its own line.
8Check that the total deductions do not exceed gross total income. State the final deduction clearly.

Quickest way: Four-bucket table under time pressure

When to use it: Use this in the 70-mark written section when a question has five or more donations, and also for MCQs on donations.

Draw four boxes: 100% free, 50% free, limited, political. Put each donation in a box in one pass and cross out cash above ₹2,000 as you go.
Compute 10% of AGTI immediately and write it beside the limited box. If total limited donations are smaller, no cap applies.
For MCQs, first check the mode of payment and the recipient. Often one option wrongly allows cash or ignores the cap, and you can eliminate it at once.
Sanity check for limited donations: the qualifying amount can never exceed 10% of AGTI. If the only limited donations are 50% ones, the deduction can never exceed 5% of AGTI. If 100% limited donations are also present, the deduction can reach 10% of AGTI. Use the right ceiling before you pick an option.
Written format: present a short table of donation, group, eligible amount, rate and deduction, then the total. Step marks are given for AGTI, the 10% limit, the exclusion of cash and each group's deduction, so show all of them.

Common mistakes in Deductions for Donations and Contributions

Applying 10% to gross total income instead of adjusted gross total income.
Students remember '10%' and skip the adjustment step.
Fix: Always write AGTI as a separate line. Subtract capital gains taxed at special rates and other Chapter VIII deductions before taking 10%.
Applying the 10% limit to each donation separately.
The limit is read as a per-donation test.
Fix: Add all donations in the limited groups, then compare the total with 10% of AGTI once.
Allowing a 50% deduction on the full donation, or forgetting the 50% after capping.
Students stop after finding the qualifying amount.
Fix: The qualifying amount is not the deduction. Multiply the capped amount by 50% for the 50% group.
Allowing cash donations of any size, or disallowing cash of exactly ₹2,000.
The cash rule is remembered loosely.
Fix: For charities, cash up to ₹2,000 is allowed and cash above it is disallowed. For political parties and electoral trusts, no cash is allowed at all.
Placing a 50% no-limit fund in the limited group, or a 100% fund in the 50% group.
Recipient lists are memorised without grouping.
Fix: Make a one-page chart of recipients by group from your current study material and revise it. In the exam, write the group name next to each donation before computing.
Allowing donation deduction under the default concessional regime, or against income the question excludes from deduction.
Students do not check the regime or the nature of income.
Fix: Read the regime in the first line of the question. Check whether any income, such as certain special-rate capital gains, is stated as not eligible for deductions.
Mixing up the contributor's deduction with the exemption of a political party's own income.
Both topics involve political parties.
Fix: Ask whose tax you are computing. If it is the donor's, use the 100% deduction for non-cash contributions. If it is the party's, it is a different provision.

Worked examples

Example 1

Mr. Arun, a resident individual under the regime allowing deductions, has gross total income of ₹10,00,000 for the tax year 2026-27. It includes long-term capital gains of ₹1,00,000, which are to be excluded in computing adjusted gross total income. The deduction for savings of ₹1,50,000 has been allowed under Chapter VIII. He made these donations: (a) ₹20,000 by cheque to the Prime Minister's National Relief Fund; (b) ₹10,000 by cheque to an approved fund that falls in the 50% no-limit group; (c) ₹90,000 by bank transfer to an approved charitable trust (50% with limit); (d) ₹5,000 in cash to the same trust. Compute the deduction for donations.

Show the solution

Remove ineligible items. Item (d) is cash above ₹2,000, so it is not eligible.
Group the donations. (a) is 100% with no limit. (b) is 50% with no limit, as stated. (c) is 50% with limit.
Compute AGTI = ₹10,00,000 − ₹1,00,000 (long-term capital gains) − ₹1,50,000 (savings deduction) = ₹7,50,000.
Qualifying limit = 10% × ₹7,50,000 = ₹75,000.
Item (c): the lower of ₹90,000 and ₹75,000 is ₹75,000. Deduction = 50% × ₹75,000 = ₹37,500.
Item (a): 100% × ₹20,000 = ₹20,000.
Item (b): 50% × ₹10,000 = ₹5,000.
Total donation deduction = ₹20,000 + ₹5,000 + ₹37,500 = ₹62,500.
Check: donation deduction ₹62,500 plus savings deduction ₹1,50,000 is ₹2,12,500, which is less than gross total income of ₹10,00,000, so the full amount is allowed.

Answer: Deduction for donations = ₹62,500.

Example 2

Ms. Rekha, a resident individual under the regime allowing deductions, has gross total income of ₹6,00,000 with no special-rate income. She claims other Chapter VIII deductions of ₹1,50,000. She paid: (a) ₹30,000 by cheque to a registered political party; (b) ₹25,000 by UPI to an approved electoral trust; (c) ₹2,000 in cash to a registered political party; (d) ₹40,000 by bank transfer to an approved charitable fund (50% with limit). Compute the total deduction for donations and contributions.

Show the solution

Item (c) is a cash contribution to a political party. No cash is allowed, so it is not eligible.
Political party and electoral trust contributions: ₹30,000 + ₹25,000 = ₹55,000, allowed at 100% with no limit.
AGTI = ₹6,00,000 − ₹1,50,000 = ₹4,50,000.
Qualifying limit = 10% × ₹4,50,000 = ₹45,000.
Item (d): the lower of ₹40,000 and ₹45,000 is ₹40,000. Deduction = 50% × ₹40,000 = ₹20,000.
Total = ₹55,000 + ₹20,000 = ₹75,000.
Check: ₹75,000 plus other deductions of ₹1,50,000 is ₹2,25,000, which is less than gross total income of ₹6,00,000, so the full amount is allowed.

Answer: Total deduction = ₹75,000 (political party and electoral trust ₹55,000 plus charitable fund ₹20,000).

Exam tips

Write the group name beside every donation before you compute. Examiners give marks for correct classification.
Show AGTI and the 10% limit as separate lines, even if the limit does not bind. It earns step marks and helps in the MCQ options that test the cap.
Scan the mode of payment first in every question. Cash is the favourite trap, and the rule for political parties differs from that for charities.
Check the regime and any instruction about excluded income before you start. A single sentence in the question can change the answer.
In the MCQs, estimate. The limited donations qualify for at most 10% of AGTI. If only 50% limited donations are present, the deduction is at most 5% of AGTI. Eliminate any option above the right ceiling.

Practice questions from Deductions from Gross Total Income

Deductions for Donations and Contributions in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Deductions for Donations and Contributions: frequently asked questions

What is the difference between 100% and 50% donations without a qualifying limit?

Both are allowed on the full amount paid, with no cap based on income. The only difference is the rate: 100% of the amount for funds such as the Prime Minister's National Relief Fund, and 50% for the recipients your study material lists in the 50% no-limit group.

How do I calculate the qualifying limit for donations?

Find adjusted gross total income, then take 10% of it. Add up all donations in the limited groups and take the lower of that total and 10% of AGTI. Then apply 100% or 50% as the question or study material directs.

What is the cash donation limit for deduction?

For charitable donations, a cash donation of more than ₹2,000 is not eligible, while cash up to ₹2,000 is. For contributions to a political party or an electoral trust, a payment in cash is not eligible at all.

How much deduction do I get for a donation to a political party?

You get 100% of the amount contributed to a registered political party, with no qualifying limit, if you pay by any mode other than cash. The same applies to contributions to an approved electoral trust. The tax treatment of the party's own income is a separate matter.

Do I get the donation deduction under the default tax regime?

No. The donation deduction is a Chapter VIII deduction, and the default concessional regime for individuals does not allow it. You can claim it only if you are under the regime that allows such deductions.