Legal Reference
Section 131 (80G donations deduction), Section 135 (trust 12AB registration), PM-CARES, PMNRF, HDFC cancer trust, ITA 2025 | 50%/100% deduction with/without qualifying limit
1. Donations Deduction Under Section 131
Donations to approved funds and charitable institutions are deductible under Section 131 (80G equivalent) of ITA 2025. The deduction is available under the old tax regime only. Approved institutions must have valid 80G registration from the Income Tax Department. The deduction is either 50% or 100% of the donation — with or without a qualifying limit (10% of adjusted gross total income).
2. Four Categories of Donations
| Category | Deduction | Qualifying Limit? | Examples |
|---|
| Category 1 | 100% | No limit | PM National Relief Fund, PMNRF, PM-CARES, National Defence Fund, Clean Ganga Fund, Swachh Bharat Kosh |
| Category 2 | 100% | 10% of ATI | Government/local authority, scientific research institutions |
| Category 3 | 50% | No limit | Jawaharlal Nehru Memorial Fund, Rajiv Gandhi Foundation |
| Category 4 | 50% | 10% of ATI | Most registered charitable trusts, NGOs, hospitals |
3. How Qualifying Limit Works
Adjusted Total Income (ATI) = Gross total income minus long-term capital gains minus Chapter VIII deductions (Section 123, 126 etc.). The qualifying limit = 10% of ATI. For donations subject to a qualifying limit, the deductible donation is the lower of the actual donation or 10% of ATI. Example: if ATI is Rs 10 lakh, qualifying limit = Rs 1 lakh. Even if donation to Category 4 trust is Rs 3 lakh, only 50% of Rs 1 lakh = Rs 50,000 is deductible.
4. Proof Required
- Receipt from the trust with: name, PAN, 80G registration number, registration validity period
- For donations above Rs 2,000: must be paid by cheque/DD/NEFT — cash donations above Rs 2,000 are NOT eligible for deduction
- Portal auto-fill: donations now appear in AIS if the receiving trust files Form 10BD — verify these against your receipts
5. Section 131 and CSR
Corporate Social Responsibility (CSR) donations under the Companies Act — if made to eligible funds/institutions — are deductible under Section 131. However, companies claiming 115BAA (22% tax) have given up Chapter VIII deductions including Section 131. Only companies under the default 30% regime can claim 80G-type deductions for CSR donations.
6. Why TaxClue
Section 131 deductions are one of the few tax-saving options that support social causes. TaxClue verifies 80G registration, computes qualifying limits, and claims correct deductions in ITR. Contact us under ITA 2025.
Disclaimer
This article is for general informational and educational purposes only. It does not constitute legal, financial, or professional tax advice. Readers are advised to consult a qualified Chartered Accountant or tax professional before making any decisions. TaxClue Consultech Pvt Ltd accepts no liability. All case studies and examples in this article are illustrative only and do not represent actual persons or transactions.
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❓ Frequently Asked Questions
How much deduction can I claim for donations?
Under Section 131 of ITA 2025 (old regime), donations to PM-CARES, PMNRF, National Defence Fund, and similar national funds: 100% deduction, no limit. Donations to most registered NGOs and charitable trusts: 50% deduction, subject to 10% of Adjusted Total Income qualifying limit. Donations to Category 2 funds (government institutions): 100% with 10% ATI limit. The qualifying limit computation ensures donations cannot be used to reduce tax below a base level.
How is the qualifying limit computed?
The qualifying limit for Section 131 donations = 10% of Adjusted Total Income (ATI). ATI = Gross total income minus long-term capital gains minus Chapter VIII deductions (Section 123, 126 etc.). The deductible donation is the lower of the actual donation or the qualifying limit. Example: ATI Rs 8 lakh; qualifying limit Rs 80,000. Donation of Rs 1.5 lakh to a Category 4 trust: only 50% of Rs 80,000 = Rs 40,000 is deductible.
Can I donate cash to a charity and claim deduction?
Donations above Rs 2,000 must be paid through banking channels — cheque, demand draft, NEFT, RTGS, or UPI — to qualify for Section 131 deduction. Cash donations exceeding Rs 2,000 are not eligible for the deduction, regardless of whether the trust has valid 80G registration. Always pay charitable donations by banking channel and keep the transaction proof along with the receipt from the trust.
Is PM-CARES Fund donation fully deductible?
Yes. Donations to the PM-CARES (Prime Minister Citizen Assistance and Relief in Emergency Situations) Fund are deductible at 100% without any qualifying limit under Category 1 of Section 131. Similarly, donations to PMNRF (Prime Minister National Relief Fund), National Defence Fund, Swachh Bharat Kosh, and Clean Ganga Fund are 100% deductible without any qualifying limit on the donation amount.
Do donations show in AIS now?
Yes. From FY 2021-22 onwards, registered trusts and institutions that receive donations must file Form 10BD (Statement of Donations) and issue Form 10BE (Certificate of Donation) to donors. This data is reflected in the donor AIS. When filing ITR, verify your AIS donation entries and report them correctly in Schedule 80G. If a donation does not appear in AIS but you have a valid receipt with 80G registration, you can still claim it — but be prepared to provide documentation if queried.
