The Income Tax Department has moved to provide much-needed clarity for taxpayers who continue to choose the old tax regime and wish to claim deductions on charitable donations. On December 19, 2025, the Central Board of Direct Taxes (CBDT) released an extensive set of Frequently Asked Questions (FAQs) detailing the substantive and procedural requirements for claiming deductions under Section 80G of the Income Tax Act, 1961.
Beyond Simple Clarification: A Guidance Note for Taxpayers
According to a report, the FAQs serve a purpose that extends beyond routine administrative guidance. S. Sriram, Executive Partner at Lakshmikumaran and Sridharan Attorneys, highlighted that the document should be read in conjunction with the department's 'NUDGE' campaign and recent press releases. He stated that the FAQ essentially acts as a guidance note from the CBDT, enabling taxpayers to test their donation deduction claims against the legal principles and regulations outlined within it.
Understanding Section 80G and the Verification Mechanism
Section 80G allows taxpayers to reduce their taxable income by claiming deductions on donations made to specified funds, trusts, and institutions. It is critical to note that the deduction is based on the actual amount paid, subject to the conditions of the Act.
The tax department has reiterated that verification of these claims will be cross-checked against disclosures made by the charitable organisations themselves. Under Rule 18AB, certain categories of donees must file Form 10BD, which contains donor details like PAN/Aadhaar, name, address, and the donated amount. For a deduction to be allowed, the amount claimed by the taxpayer must precisely match the details reported by the institution. Donors are also required to obtain a donation certificate in Form 10BE where applicable.
Key Conditions and Categories of Deductions
The FAQs clearly outline who can claim the benefit and what types of donations qualify. Any taxpayer—including individuals, HUFs, companies, and firms—with taxable income can claim the deduction, provided the donation is made to an eligible entity and all compliance requirements are fulfilled.
Donations under Section 80G are categorised into four distinct types:
- 100% deduction without any qualifying limit.
- 50% deduction without any qualifying limit.
- 100% deduction subject to a qualifying limit of 10% of adjusted gross total income.
- 50% deduction subject to the same 10% qualifying limit.
The list includes 24 categories of funds and institutions eligible for 100% deduction without limit. Others, like the Prime Minister’s Drought Relief Fund, qualify for 50% deduction without limit. Donations for specific causes like family planning or sports infrastructure may qualify for 100% deduction but are subject to limits.
Critical Points Taxpayers Must Remember
The department's clarification includes several non-negotiable conditions:
Cash donations exceeding Rs 2,000 are not eligible for deduction. A donation claimed under Section 80G cannot be claimed again under any other provision of the Act. Importantly, no deduction under Section 80G is available for taxpayers opting for the new tax regime under Section 115BAC. Taxpayers are advised to verify the approval status and deduction category of any institution through the Income Tax Department's official online database before making a donation or claiming a deduction.
Only donations made to funds or institutions specifically listed under Section 80G(2)(a) and those registered and approved under Section 80G qualify for the tax benefit. This latest guidance aims to streamline the process and ensure compliance, helping well-intentioned donors avoid disallowance of their claims during assessment.
