Section 80G is the comprehensive donation deduction. Four-tier architecture: (a) 100% without qualifying limit — National Defence Fund, PM Relief Fund, PM National Relief Fund, certain notified funds; (b) 50% without qualifying limit — JM National Relief Fund, certain charitable trusts; (c) 100% with qualifying limit — donations subject to 10% of GTI ceiling; (d) 50% with qualifying limit — other approved donations subject to 10% GTI ceiling.
Cash payment restriction — FA 2017 introduced Rs 2,000 cash limit. Donations above Rs 2,000 must be by non-cash mode (cheque / bank / online). FA 2020 introduced Form 10BD donation statement (filed by donee trust annually) + Form 10BE donor receipt — comprehensive donation-trace infrastructure. Cross-tally between Form 10BD and donor's 80G claims is automated.
Section 115BAC new regime — 80G NOT available. Old regime preserves comprehensive donation framework. Practitioner discipline — preserve Form 10BE donor receipt + 80G certificate of donee trust + bank-channel evidence.
The transition to the Income-tax Act, 2025 preserves the Chapter VI-A framework. Section 536 saving for pending matters.
FINANCE ACT AMENDMENT TIMELINE
■ FA 1965 — Section 80G originally introduced.
■ FA 2014 — 50% Without QL → 100% Without QL for certain disaster relief funds.
■ FA 2017 — Rs 2,000 cash limit.
■ FA 2020 — Form 10BD / 10BE donation statement framework.
■ FA 2021 — Sections 12AB framework for donee approval.
■ FA 2020 — Section 115BAC new regime; 80G unavailable.
Facts. The Department sought to apply a surcharge provision retrospectively to block-period assessments. The assessee contended that the amendment was substantive and could not have retrospective operation absent express legislative direction.
Issue. Whether amendments to taxing statutes operate prospectively unless the legislature has expressly or by necessary implication conferred retrospective effect.
HELD. The Constitution Bench reaffirmed the general rule against retrospectivity of taxing statutes. A taxing provision must be construed prospectively unless the language compels otherwise; mere insertion or substitution by amendment is not sufficient to deny vested rights.
“Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation.”
Relevance. Anchor authority for any argument that an amendment to a charging or computational provision must apply only from the AY notified — useful in transitional disputes around FA 2025 and the 1961 → 2025 changeover.
Facts. Section 52(2) (since deleted) deemed sale consideration to be FMV where FMV exceeded the declared consideration by 15%. The Department applied it on a literal reading even when the assessee had not in fact received more than the declared price.
Issue. Whether a deeming provision in a charging schema can be construed literally where its plain reading produces a result manifestly contrary to legislative object.
HELD. The Court read down section 52(2) to apply only where the assessee had actually received consideration in excess of the declared sum. A literal construction yielding absurd or unjust results must yield to an object-based interpretation; the CBDT's contemporaneous Circular No. 96 was held binding on the Revenue.
“It is well settled that a literal construction of a statutory provision ought not to be adopted if it produces a manifestly unjust result… Where a literal construction creates an anomaly, the courts will adopt that construction which avoids the anomaly.”
Relevance. Anchor authority for purposive construction of deeming fictions across the 1961 Act — applies wherever a deeming clause (e.g., s. 50C, s. 56(2)(x), s. 2(22)(e)) yields a result contrary to legislative purpose.
▸ Mathuram Agrawal v. State of Madhya Pradesh (1999) 8 SCC 667 ; (2000) 1 SCR 1 (Supreme Court)
Facts. A municipal levy was challenged on the ground that the charging provision did not clearly specify the rate, the persons charged, and the measure of tax.
Issue. Whether a tax can be imposed in the absence of a clear, unambiguous charging provision identifying the subject, measure, rate, and incidence.
HELD. Article 265 demands that tax be levied only by clear authority of law. The four components — taxable event, person, rate, and measure — must be clearly discernible from the charging provision; ambiguity is fatal to the levy.
“The intention of the Legislature in a taxation statute is to be gathered from the language of the provisions, particularly when the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose other than what is given expression to.”
Relevance. Foundational authority on the rigour required of charging sections — underpins arguments that ambiguous deeming fictions, surcharge formulas, and rate prescriptions must be strictly construed.
▸ Commissioner of Income-tax v. B.C. Srinivasa Setty (1981) 128 ITR 294 ; (1981) 2 SCC 460 (Supreme Court)
Facts. The assessee transferred goodwill of a self-generated nature. The Department sought to tax the consideration as capital gains; the assessee contended that no cost of acquisition could be ascertained, hence the computation provisions failed.
Issue. Whether capital gains arises where the asset has no ascertainable cost of acquisition — i.e., whether the charging provision can be invoked independently of a workable computation provision.
HELD. The charging section and the computation provisions form an integrated code; if the computation provisions cannot apply (because the cost is incapable of ascertainment), the charge itself fails. Self-generated goodwill is not taxable as capital gains.
“The charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section.”
Relevance. Anchor for the 'charge fails when computation fails' doctrine — useful in valuation impasses, self-generated assets, and computational ambiguity (though now largely overtaken by section 55(2)(a)(i) deeming cost as nil).
▸ Commissioner of Income-tax v. Excel Industries Ltd. (2013) 358 ITR 295 ; (2014) 2 SCC 1 (Supreme Court)
Facts. The assessee, an export-oriented unit, received DEPB licences and Advance Licences. The Department sought to tax the value of these incentives on accrual at the time of issue; the assessee contended that no income accrued until the licence was actually used or sold.
Issue. When does income accrue under the mercantile system — at the moment a right is created, or at the moment the right becomes enforceable as a debt?
HELD. Income accrues only when there is a corresponding liability of the other party. Mere creation of a contingent or unmatured right does not amount to accrual; the right must crystallise into a debt before tax incidence.
“Income accrues when there arises in favour of the assessee a debt — when there is a corresponding liability of the other party to pay the amount. It is not enough that the right has come into being; the right must ripen into a debt.”
Relevance. Anchor for accrual-vs-receipt timing disputes under section 5 / section 145 — relevant for retention monies, export incentives, contingent claim settlements, milestone-based contracts.
CBDT CIRCULARS — ECOSYSTEM
▸ CBDT Circular No. 14(XL-35) of 1955 dated 11 April 1955
Subject. Duty of officers to assist assessees in claiming and securing relief
Substance. Foundational circular directing that the AO should not exploit assessee ignorance to deny legitimate reliefs; officer is required to draw attention to refunds or reliefs to which the assessee is entitled. The circular has been judicially noted in several appellate decisions and remains operative for first-appellate practice.
Substance. Explained the FA 1987 / FA 1989 amendments unifying the previous year with the financial year preceding the AY, including transitional provisions for assessees with different accounting years. Useful in any controversy on the timing of accrual / chargeability for early post-1989 AYs.
▸ CBDT Circular No. 5 of 2014 dated 11 February 2014
Subject. Section 14A — dis-allowance even where no exempt income earned (since modulated)
Substance. Initially directed AOs to apply Rule 8D disallowance under section 14A even where no exempt income was earned in the year; subsequently modulated by Cheminvest (Del HC) and Maxopp (SC). FA 2022 amendment to section 14A re-asserted the position but remains under litigation.
▸ CBDT Circular No. 6 of 2019 dated 20 March 2019
Subject. Withdrawal of low-tax-effect appeals — monetary thresholds
Substance. Revised monetary thresholds for departmental appeals — ITAT (Rs 50L), HC (Rs 1 Cr), SC (Rs 2 Cr); subsequently further revised. Operates as a non-statutory limitation on the Revenue's appellate engagement, binding under section 119.
WORKED EXAMPLES
Illustration — Illustration 1 — PM Relief Fund 100% no-cap
Facts. A donates Rs 50,000 to PM National Relief Fund.
Computation.
S. 80G — 100% deduction without qualifying limit for specified funds.
SECTION 80G — DEDUCTION IN RESPECT OF DONATIONS TO CERTAIN FUNDS, CHARITABLE INSTITUTIONS, ETC.
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
STATUTORY SCHEME (editorial summary — verbatim bare-Act text in the companion Block-1 file)
Marginal heading: Deduction in respect of donations to certain funds, charitable institutions, etc.
Section 80G allows any assessee a deduction in respect of donations to specified funds and approved charitable institutions. Some donations qualify for a 100 per cent deduction and others for 50 per cent; some are without any qualifying limit and others are restricted to 10 per cent of adjusted gross total income (sub-section (4)). Sub-section (5) prescribes the conditions an institution must satisfy and the approval mechanism. Sub-section (5B) permits an institution otherwise eligible to incur up to 5 per cent of its total income on religious purposes without losing approval. Sub-section (5C) governs the Prime Minister's National Relief Fund and similar funds. Donations in excess of Rs 2,000 must be made otherwise than in cash (sub-section (5D)); donations in kind do not qualify; and (Explanation 2) sums treated as Corporate Social Responsibility expenditure under the Companies Act are, in general, not eligible (subject to the specified exceptions such as the Swachh Bharat Kosh and the Clean Ganga Fund).
A. SECTION COMMENTARY
A.1 Structural position
Section 80G is the principal donation deduction of Chapter VIA, available to all classes of assessee. It is a donor-side relief; the institution's side is governed by sections 11 to 13 and the registration regime in sections 12A/12AB. The interface between charitable status, 80G approval and the donor's deduction is the source of most of the jurisprudence.
A.2 Provision taxonomy
The deduction operates through a matrix: rate (100 per cent or 50 per cent) and limit (with or without the 10-per-cent-of-adjusted-GTI qualifying cap). The institutional conditions in sub-section (5) include non-diversion to religious purposes (subject to the 5-per-cent tolerance in sub-section (5B)), maintenance of accounts, and approval. Procedural conditions on the donor side include the non-cash mode for donations above Rs 2,000, the exclusion of donations in kind, and (post-2020) reliance on the statement of donations filed by the institution (Form 10BD) and the certificate (Form 10BE).
A.3 Core doctrinal themes
Three themes dominate. (i) The religious-purpose bar: an institution any of whose objects is wholly or substantially of a religious nature falls outside section 80G (Upper Ganges Sugar Mills), subject only to the 5-per-cent tolerance in sub-section (5B). (ii) The scope of enquiry at the approval stage: the Commissioner examines the objects and the entitlement to approval, not the assessment of the institution (N. N. Desai Charitable Trust). (iii) The relationship between section 12A/12AB registration and section 80G approval — they are distinct, and approval requires its own examination; this interface is the subject of continuing litigation. A fourth, practical, theme is the mode-of-donation and CSR restrictions.
A.4 Legislative evolution / FA amendment trail
The cash-donation ceiling was reduced from Rs 10,000 to Rs 2,000 by the Finance Act, 2017. Explanation 2 (CSR exclusion) was inserted by the Finance (No. 2) Act, 2014. The donation-reporting regime (Form 10BD / Form 10BE) and the time-limited / provisional approval system were introduced by the Finance Act, 2020 (operative from 2021-22) and refined thereafter. The Finance Act, 2026 makes no change to section 80G; the deduction is unavailable under the default section 115BAC regime.
A.5 CA practitioner pointers
(1) Verify the institution holds a valid section 80G approval (not merely section 12A/12AB registration) covering the date of donation, and obtain Form 10BE. (2) Donations above Rs 2,000 must be by a non-cash mode; donations in kind do not qualify. (3) Apply the correct rate (100 or 50 per cent) and the 10-per-cent-of-adjusted-GTI qualifying limit where applicable. (4) CSR contributions are generally not deductible under section 80G, except to the specified funds. (5) Caution clients that contributions to institutions with religious objects may fail under Upper Ganges Sugar Mills.
B. FA 2026 IMPACT NOTE
Section 80G of the Income-tax Act, 1961 is NOT amended by the Finance Act, 2026. The rate/limit matrix, the non-cash condition above Rs 2,000, the CSR exclusion and the Form 10BD/10BE reporting regime continue for assessment year 2026-27; the deduction is available only under the old regime.
Facts: The assessee company contributed to the Vishwa Mangal Trust and claimed a deduction under section 80G. One of the trust's objects permitted application of funds towards prayer halls and places of worship.
Issue: Whether a donation to a trust, one of whose objects is wholly or substantially of a religious nature, qualifies for deduction under section 80G.
Held: The Supreme Court held that if any one of the objects of the institution is wholly, or substantially wholly, of a religious nature, the institution falls outside the scope of section 80G and the donation does not secure the deduction; this is so even if the trust is for the advancement of all religions.
Ratio: Section 80G is confined to institutions established for a charitable purpose that does not include a purpose substantially religious in nature; a single substantially-religious object disqualifies the institution (subject only to the later 5-per-cent tolerance in sub-section (5B)).
Relevance: The leading Supreme Court authority on the religious-purpose limitation; decisive whenever a donee's objects include a religious element.
Cluster C-2 : Scope of enquiry at the approval stage
N. N. Desai Charitable Trust v. CIT (2000) 246 ITR 452 (Gujarat High Court)
Facts: The Commissioner refused approval under section 80G(5) by, in effect, assessing whether the institution's income would actually be exempt, rather than examining its eligibility for approval.
Issue: What is the scope of the Commissioner's enquiry when granting approval under section 80G(5) — examination of the objects and entitlement to approval, or assessment of the institution's income.
Held: The High Court held that at the approval stage the authority examines whether the institution's objects are charitable and whether the conditions of section 80G(5) are satisfied; it does not, at that stage, make an assessment of the institution's income or pre-judge the exemption — that is for the assessment of the institution.
Ratio: Approval under section 80G(5) is a distinct exercise from assessment; the enquiry is into eligibility (objects and conditions), not into the quantum or actual exemption of the institution's income.
Relevance: The standard authority delimiting the approval enquiry; relied on in resisting over-broad scrutiny at the approval stage.
Cluster C-3 : Mode of donation, donations in kind and CSR
Statutory conditions — sub-section (5D), donations in kind, and Explanation 2 (CSR)
Facts: A donor makes a cash donation exceeding Rs 2,000, or donates goods, or claims a CSR contribution as a section 80G donation.
Issue: Whether such donations qualify for the deduction.
Held: A donation exceeding Rs 2,000 not made by a non-cash mode is disqualified (sub-section (5D)); a donation in kind does not qualify (only sums of money do); and a sum treated as CSR expenditure under the Companies Act is, by Explanation 2, generally not eligible, except donations to the specified funds (such as the Swachh Bharat Kosh and the Clean Ganga Fund).
Ratio: The deduction is confined to monetary donations made (above Rs 2,000) by a non-cash mode, excluding gifts in kind and (in general) CSR contributions.
Relevance: The day-to-day compliance rules that determine the bulk of section 80G disallowances in practice.
Editorial note on sourcing
Editorial scheme summary prepared from the Income-tax Act, 1961 as amended by the Finance Act, 2025, read with the Finance Act, 2026; verbatim bare-Act text is carried in the companion Block-1 treatise file. Case law is restricted to reported Supreme Court / High Court authority verified against standard law reports (ITR/Taxman/CTR). Where a deduction is documentary and lightly litigated, that is stated candidly and the governing statutory/administrative material is given.
STATUTORY ARCHITECTURE — 18-ROW MAP
01. Section & marginal note
Section 80G — Donations to Charitable Funds / Institutions — Chapter VI-A.
02. Sub-section structure
Per operative text + provisos.
03. Operative trigger
Eligible investment / payment / contribution / qualifying activity.
04. Persons affected
Individuals / HUFs / specified entities per section.
05. Time anchor — PY / AY
Investment / payment must be within PY; s. 139 due-date filing.
06. Income anchor
Reduces GTI to arrive at total income; post all head-wise computation.
07. Residential-status nexus
Resident-only for most; some sections (e.g., 80G) extend to all.
08. Rate / charge mechanism
Direct reduction of taxable income.
09. TDS / TCS interaction
Standard.
10. Advance-tax obligation
On net post-deduction income.
11. Presumptive provisions
Section 44AD / 44ADA — restrictions on additional VI-A deductions.
12. Exemption / deduction mechanism
Section IS the deduction provision.
13. Refund / credit
Standard refund framework.
14. Return / disclosure reporting
ITR Schedule VIA + supporting evidence (Form 12BB / receipts).
15. Penalty exposure
Section 270A on incorrect / inflated claim.
16. Prosecution exposure
Section 277 false statement.
17. Cross-statute interplay
Section 80AC + s. 139(1) timing; section 115BAC new regime restrictions.
18. Repeal & saving — 1961 → 2025
Preserved; some sections sunset for new claims.
HISTORICAL CONTEXT
Section 80G is the comprehensive donation deduction. Four-tier architecture: (a) 100% without qualifying limit — National Defence Fund, PM Relief Fund, PM National Relief Fund, certain notified funds; (b) 50% without qualifying limit — JM National Relief Fund, certain charitable trusts; (c) 100% with qualifying limit — donations subject to 10% of GTI ceiling; (d) 50% with qualifying limit — other approved donations subject to 10% GTI ceiling.
Cash payment restriction — FA 2017 introduced Rs 2,000 cash limit. Donations above Rs 2,000 must be by non-cash mode (cheque / bank / online). FA 2020 introduced Form 10BD donation statement (filed by donee trust annually) + Form 10BE donor receipt — comprehensive donation-trace infrastructure. Cross-tally between Form 10BD and donor's 80G claims is automated.
Section 115BAC new regime — 80G NOT available. Old regime preserves comprehensive donation framework. Practitioner discipline — preserve Form 10BE donor receipt + 80G certificate of donee trust + bank-channel evidence.
The transition to the Income-tax Act, 2025 preserves the Chapter VI-A framework. Section 536 saving for pending matters.
FINANCE ACT AMENDMENT TIMELINE
■ FA 1965 — Section 80G originally introduced.
■ FA 2014 — 50% Without QL → 100% Without QL for certain disaster relief funds.
■ FA 2017 — Rs 2,000 cash limit.
■ FA 2020 — Form 10BD / 10BE donation statement framework.
■ FA 2021 — Sections 12AB framework for donee approval.
■ FA 2020 — Section 115BAC new regime; 80G unavailable.
■ FA 2024 / 2025 — Minor refinements.
■ Income-tax Act, 2025 — Section 80G successor, operative 1-4-2026.
JUDICIAL EVOLUTION — VERIFIED LANDMARK AUTHORITIES
▸ Commissioner of Income-tax v. Vatika Township Pvt. Ltd. (2014) 367 ITR 466 ; (2015) 1 SCC 1 (Supreme Court — 5-Judge Constitution Bench)
Facts. The Department sought to apply a surcharge provision retrospectively to block-period assessments. The assessee contended that the amendment was substantive and could not have retrospective operation absent express legislative direction.
Issue. Whether amendments to taxing statutes operate prospectively unless the legislature has expressly or by necessary implication conferred retrospective effect.
HELD. The Constitution Bench reaffirmed the general rule against retrospectivity of taxing statutes. A taxing provision must be construed prospectively unless the language compels otherwise; mere insertion or substitution by amendment is not sufficient to deny vested rights.
“Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation.”
Relevance. Anchor authority for any argument that an amendment to a charging or computational provision must apply only from the AY notified — useful in transitional disputes around FA 2025 and the 1961 → 2025 changeover.
▸ K.P. Varghese v. Income-tax Officer, Ernakulam (1981) 131 ITR 597 ; (1981) 4 SCC 173 (Supreme Court — 3-Judge Bench)
Facts. Section 52(2) (since deleted) deemed sale consideration to be FMV where FMV exceeded the declared consideration by 15%. The Department applied it on a literal reading even when the assessee had not in fact received more than the declared price.
Issue. Whether a deeming provision in a charging schema can be construed literally where its plain reading produces a result manifestly contrary to legislative object.
HELD. The Court read down section 52(2) to apply only where the assessee had actually received consideration in excess of the declared sum. A literal construction yielding absurd or unjust results must yield to an object-based interpretation; the CBDT's contemporaneous Circular No. 96 was held binding on the Revenue.
“It is well settled that a literal construction of a statutory provision ought not to be adopted if it produces a manifestly unjust result… Where a literal construction creates an anomaly, the courts will adopt that construction which avoids the anomaly.”
Relevance. Anchor authority for purposive construction of deeming fictions across the 1961 Act — applies wherever a deeming clause (e.g., s. 50C, s. 56(2)(x), s. 2(22)(e)) yields a result contrary to legislative purpose.
▸ Mathuram Agrawal v. State of Madhya Pradesh (1999) 8 SCC 667 ; (2000) 1 SCR 1 (Supreme Court)
Facts. A municipal levy was challenged on the ground that the charging provision did not clearly specify the rate, the persons charged, and the measure of tax.
Issue. Whether a tax can be imposed in the absence of a clear, unambiguous charging provision identifying the subject, measure, rate, and incidence.
HELD. Article 265 demands that tax be levied only by clear authority of law. The four components — taxable event, person, rate, and measure — must be clearly discernible from the charging provision; ambiguity is fatal to the levy.
“The intention of the Legislature in a taxation statute is to be gathered from the language of the provisions, particularly when the language is plain and unambiguous. In a taxing Act it is not possible to assume any intention or governing purpose other than what is given expression to.”
Relevance. Foundational authority on the rigour required of charging sections — underpins arguments that ambiguous deeming fictions, surcharge formulas, and rate prescriptions must be strictly construed.
▸ Commissioner of Income-tax v. B.C. Srinivasa Setty (1981) 128 ITR 294 ; (1981) 2 SCC 460 (Supreme Court)
Facts. The assessee transferred goodwill of a self-generated nature. The Department sought to tax the consideration as capital gains; the assessee contended that no cost of acquisition could be ascertained, hence the computation provisions failed.
Issue. Whether capital gains arises where the asset has no ascertainable cost of acquisition — i.e., whether the charging provision can be invoked independently of a workable computation provision.
HELD. The charging section and the computation provisions form an integrated code; if the computation provisions cannot apply (because the cost is incapable of ascertainment), the charge itself fails. Self-generated goodwill is not taxable as capital gains.
“The charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section.”
Relevance. Anchor for the 'charge fails when computation fails' doctrine — useful in valuation impasses, self-generated assets, and computational ambiguity (though now largely overtaken by section 55(2)(a)(i) deeming cost as nil).
▸ Commissioner of Income-tax v. Excel Industries Ltd. (2013) 358 ITR 295 ; (2014) 2 SCC 1 (Supreme Court)
Facts. The assessee, an export-oriented unit, received DEPB licences and Advance Licences. The Department sought to tax the value of these incentives on accrual at the time of issue; the assessee contended that no income accrued until the licence was actually used or sold.
Issue. When does income accrue under the mercantile system — at the moment a right is created, or at the moment the right becomes enforceable as a debt?
HELD. Income accrues only when there is a corresponding liability of the other party. Mere creation of a contingent or unmatured right does not amount to accrual; the right must crystallise into a debt before tax incidence.
“Income accrues when there arises in favour of the assessee a debt — when there is a corresponding liability of the other party to pay the amount. It is not enough that the right has come into being; the right must ripen into a debt.”
Relevance. Anchor for accrual-vs-receipt timing disputes under section 5 / section 145 — relevant for retention monies, export incentives, contingent claim settlements, milestone-based contracts.
CBDT CIRCULARS — ECOSYSTEM
▸ CBDT Circular No. 14(XL-35) of 1955 dated 11 April 1955
Subject. Duty of officers to assist assessees in claiming and securing relief
Substance. Foundational circular directing that the AO should not exploit assessee ignorance to deny legitimate reliefs; officer is required to draw attention to refunds or reliefs to which the assessee is entitled. The circular has been judicially noted in several appellate decisions and remains operative for first-appellate practice.
▸ CBDT Circular No. 549 dated 31 October 1989
Subject. Explanatory notes — Finance Act 1989 amendments (incl. PY unification)
Substance. Explained the FA 1987 / FA 1989 amendments unifying the previous year with the financial year preceding the AY, including transitional provisions for assessees with different accounting years. Useful in any controversy on the timing of accrual / chargeability for early post-1989 AYs.
▸ CBDT Circular No. 5 of 2014 dated 11 February 2014
Subject. Section 14A — dis-allowance even where no exempt income earned (since modulated)
Substance. Initially directed AOs to apply Rule 8D disallowance under section 14A even where no exempt income was earned in the year; subsequently modulated by Cheminvest (Del HC) and Maxopp (SC). FA 2022 amendment to section 14A re-asserted the position but remains under litigation.
▸ CBDT Circular No. 6 of 2019 dated 20 March 2019
Subject. Withdrawal of low-tax-effect appeals — monetary thresholds
Substance. Revised monetary thresholds for departmental appeals — ITAT (Rs 50L), HC (Rs 1 Cr), SC (Rs 2 Cr); subsequently further revised. Operates as a non-statutory limitation on the Revenue's appellate engagement, binding under section 119.
WORKED EXAMPLES
Illustration — Illustration 1 — PM Relief Fund 100% no-cap
Facts. A donates Rs 50,000 to PM National Relief Fund.
Computation.
S. 80G — 100% deduction without qualifying limit for specified funds.
Full Rs 50,000 deductible.
Non-cash mode + Form 10BE receipt required.
Result. Specified funds — 100% no-cap; structural relief.
Illustration — Illustration 2 — 50% with qualifying limit
Facts. B donates Rs 1 L to approved charitable trust (50% QL category); GTI Rs 8 L.
Computation.
10% GTI ceiling = Rs 80,000.
Donation Rs 1 L > Rs 80,000 → qualifying limit applies.
Deduction = 50% × Rs 80,000 = Rs 40,000.
Result. Qualifying limit caps deduction; 50% rate further reduces.
Illustration — Illustration 3 — Cash > Rs 2,000
Facts. C donates Rs 5,000 in cash to charitable trust.
Computation.
S. 80G proviso — > Rs 2,000 cash → DISALLOWED.
No deduction.
Use cheque / bank / online for amounts > Rs 2,000.
Result. Cash > Rs 2,000 strict prohibition; non-cash discipline.
Illustration — Illustration 4 — Form 10BE compliance
Facts. D donates Rs 1 L; trust fails to file Form 10BD / issue Form 10BE.
Computation.
FA 2020 framework — Form 10BD by trust + Form 10BE to donor.
Without Form 10BE — AO challenge possible.
Donor's 80G claim may be disallowed.
Preserve donor-trust communication.
Result. Form 10BE essential for 80G claim; donor responsibility to obtain.
Illustration — Illustration 5 — Multiple donations
Facts. E donates: Rs 30K to PM Relief (100% no cap); Rs 50K to school (50% QL); GTI Rs 10 L.
Computation.
PM Relief: 100% × Rs 30K = Rs 30K (no cap).
School: 10% × Rs 10 L = Rs 1 L QL; donation Rs 50K ≤ Rs 1 L → full Rs 50K × 50% = Rs 25K.
Total deduction = Rs 30K + Rs 25K = Rs 55K.
Result. Mixed-tier donations computed tier-wise; comprehensive understanding essential.
PRACTITIONER PLANNING NOTES
■ Old vs new regime — most Chapter VI-A deductions UNAVAILABLE under new regime (s. 115BAC); annual selection critical.
■ Investment / payment evidence — receipts / certificates / loan statements / premium receipts — preserved 7 years.
■ Form 12BB — Investment declaration to employer; preserves TDS-side compliance.
■ Section 80AC — Timely return filing for sectional deduction preservation.
■ Section 80A — Aggregate Chapter VI-A deduction cannot exceed GTI.
■ Section 80AB — Computation framework; some deductions on net (not gross).
■ ITR Schedule VIA — Comprehensive disclosure essential.
■ Joint-investment / joint-loan apportionment between co-borrowers / co-investors.
■ Self-funding requirement — most deductions need own-source-funded investment.
■ Cross-statute interplay — PMS / NPS / EPF Acts; SEBI Regulations; trust law for s. 80G donee.
■ Annual practitioner review — track FA changes to thresholds and conditions.
■ Section 273B reasonable-cause defence for procedural lapses.
■ Senior citizen carve-outs — preserve age / status evidence.
■ Disability / specified illness — preserve certificates.
■ Documentation — original receipts / certificates / Form 16 — retained 7 years.
LITIGATION DEFENCE
■ Strict construction — Mathuram Agrawal anchor.
■ Object-based interpretation — K.P. Varghese; deductions are beneficial — ambiguity resolves in favour.
■ Prospective amendment — Vatika Township for FA changes.
■ BC Srinivasa Setty — computation issues.
■ Excel Industries — accrual / receipt timing of investment / payment.
■ Maxopp Investment — for s. 14A interaction.
■ Investment evidence defence — produce original receipts / certificates.
■ Loan source defence — preserve loan / repayment trail.
■ Section 80AC timing defence — file return within due date.
■ Joint investment / loan apportionment.
■ Reliance Petroproducts — bona-fide claim not concealment.
■ Calcutta Discount Article 226 — for jurisdictional errors.
■ Section 273B reasonable-cause defence.
■ Beneficial circulars — UCO Bank anchor.
■ Documentation defence — Form 16 / Form 12BB / receipts / certificates.
■ Section 270A bona-fide claim defence.
PROCEDURE
Step 1. Identify eligible investment / payment
Per section's qualifying categories.
Step 2. Verify investment / payment within PY
Section 80A(1) requirement.
Step 3. Compute deductible amount
Per section's cap / formula.
Step 4. Apply section-specific conditions
All conditions strictly satisfied.
Step 5. Verify section 80AC timing (where applicable)
Return within s. 139(1) due date.
Step 6. Apply section 80A overall ceiling
Deduction not exceed GTI.
Step 7. Old vs new regime selection
Most deductions only old regime.
Step 8. Form 12BB to employer
For TDS-side recognition.
Step 9. ITR Schedule VIA populated
Section-wise disclosure.
Step 10. Joint investment apportionment
Per contribution share.
Step 11. Cross-statute compliance
PMS / NPS / EPF / SEBI / Trust Act.
Step 12. Document receipts / certificates
Original retained 7 years.
Step 13. Section 270A defence preparation
Bona-fide claim.
Step 14. Section 273B reasonable cause
For procedural lapses.
Step 15. Annual review
Track FA changes.
PRACTITIONER CHECKLIST
☐ Eligible investment / payment identified.
☐ Within PY timing verified.
☐ Deductible amount per section cap.
☐ All conditions strictly satisfied.
☐ Section 80AC timing (return within due date).
☐ Section 80A overall GTI ceiling.
☐ Old vs new regime selection done.
☐ Form 12BB to employer.
☐ Section 115BAC new regime restrictions noted.
☐ ITR Schedule VIA populated.
☐ Joint investment / loan apportionment.
☐ Cross-statute compliance verified.
☐ Original receipts / certificates 7 years.
☐ Section 270A bona-fide claim.
☐ Section 273B defence prepared.
☐ Annual FA update.
☐ Senior citizen / disability evidence.
☐ Self-funding source preserved.
☐ Client briefing on regime selection.
CROSS-REFERENCES
▸ Section 4 — Charge.
▸ Section 14 — Heads.
▸ Section 80A — General rules.
▸ Section 80AB — Computation framework.
▸ Section 80AC — Return-filing timing.
▸ Section 115BAC — New regime.
▸ Section 139 — Return.
▸ Section 270A — Penalty.
▸ Section 273B — Reasonable cause.
▸ ITR Schedule VIA.
▸ Form 12BB — Investment declaration.
▸ Income-tax Act, 2025 — Successor, operative 1-4-2026.
▸ Income-tax Act, 2025 — Section 536 (saving).
▸ Section 12AB — Donee trust registration.
▸ Section 11 / 12 — Trust framework parallel.
▸ Section 56(2)(x) — Gift framework.
▸ Section 80GGA — Scientific research.
▸ Section 80GGB / GGC — Political donations.
▸ Form 10BD — Donation statement by trust.
▸ Form 10BE — Donor receipt.
▸ FCRA, 2010 — Foreign contributions.
Case Laws & Commentary
SECTION 80G — DEDUCTION IN RESPECT OF DONATIONS TO CERTAIN FUNDS, CHARITABLE INSTITUTIONS, ETC.
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
STATUTORY SCHEME (editorial summary — verbatim bare-Act text in the companion Block-1 file)
Marginal heading: Deduction in respect of donations to certain funds, charitable institutions, etc.
Section 80G allows any assessee a deduction in respect of donations to specified funds and approved charitable institutions. Some donations qualify for a 100 per cent deduction and others for 50 per cent; some are without any qualifying limit and others are restricted to 10 per cent of adjusted gross total income (sub-section (4)). Sub-section (5) prescribes the conditions an institution must satisfy and the approval mechanism. Sub-section (5B) permits an institution otherwise eligible to incur up to 5 per cent of its total income on religious purposes without losing approval. Sub-section (5C) governs the Prime Minister's National Relief Fund and similar funds. Donations in excess of Rs 2,000 must be made otherwise than in cash (sub-section (5D)); donations in kind do not qualify; and (Explanation 2) sums treated as Corporate Social Responsibility expenditure under the Companies Act are, in general, not eligible (subject to the specified exceptions such as the Swachh Bharat Kosh and the Clean Ganga Fund).
A. SECTION COMMENTARY
A.1 Structural position
Section 80G is the principal donation deduction of Chapter VIA, available to all classes of assessee. It is a donor-side relief; the institution's side is governed by sections 11 to 13 and the registration regime in sections 12A/12AB. The interface between charitable status, 80G approval and the donor's deduction is the source of most of the jurisprudence.
A.2 Provision taxonomy
The deduction operates through a matrix: rate (100 per cent or 50 per cent) and limit (with or without the 10-per-cent-of-adjusted-GTI qualifying cap). The institutional conditions in sub-section (5) include non-diversion to religious purposes (subject to the 5-per-cent tolerance in sub-section (5B)), maintenance of accounts, and approval. Procedural conditions on the donor side include the non-cash mode for donations above Rs 2,000, the exclusion of donations in kind, and (post-2020) reliance on the statement of donations filed by the institution (Form 10BD) and the certificate (Form 10BE).
A.3 Core doctrinal themes
Three themes dominate. (i) The religious-purpose bar: an institution any of whose objects is wholly or substantially of a religious nature falls outside section 80G (Upper Ganges Sugar Mills), subject only to the 5-per-cent tolerance in sub-section (5B). (ii) The scope of enquiry at the approval stage: the Commissioner examines the objects and the entitlement to approval, not the assessment of the institution (N. N. Desai Charitable Trust). (iii) The relationship between section 12A/12AB registration and section 80G approval — they are distinct, and approval requires its own examination; this interface is the subject of continuing litigation. A fourth, practical, theme is the mode-of-donation and CSR restrictions.
A.4 Legislative evolution / FA amendment trail
The cash-donation ceiling was reduced from Rs 10,000 to Rs 2,000 by the Finance Act, 2017. Explanation 2 (CSR exclusion) was inserted by the Finance (No. 2) Act, 2014. The donation-reporting regime (Form 10BD / Form 10BE) and the time-limited / provisional approval system were introduced by the Finance Act, 2020 (operative from 2021-22) and refined thereafter. The Finance Act, 2026 makes no change to section 80G; the deduction is unavailable under the default section 115BAC regime.
A.5 CA practitioner pointers
(1) Verify the institution holds a valid section 80G approval (not merely section 12A/12AB registration) covering the date of donation, and obtain Form 10BE. (2) Donations above Rs 2,000 must be by a non-cash mode; donations in kind do not qualify. (3) Apply the correct rate (100 or 50 per cent) and the 10-per-cent-of-adjusted-GTI qualifying limit where applicable. (4) CSR contributions are generally not deductible under section 80G, except to the specified funds. (5) Caution clients that contributions to institutions with religious objects may fail under Upper Ganges Sugar Mills.
B. FA 2026 IMPACT NOTE
Section 80G of the Income-tax Act, 1961 is NOT amended by the Finance Act, 2026. The rate/limit matrix, the non-cash condition above Rs 2,000, the CSR exclusion and the Form 10BD/10BE reporting regime continue for assessment year 2026-27; the deduction is available only under the old regime.
C. CASE LAW — CLUSTERED BY ISSUE
Cluster C-1 : The religious-purpose bar
Upper Ganges Sugar Mills Ltd. v. CIT (1997) 227 ITR 578 (SC)
Facts: The assessee company contributed to the Vishwa Mangal Trust and claimed a deduction under section 80G. One of the trust's objects permitted application of funds towards prayer halls and places of worship.
Issue: Whether a donation to a trust, one of whose objects is wholly or substantially of a religious nature, qualifies for deduction under section 80G.
Held: The Supreme Court held that if any one of the objects of the institution is wholly, or substantially wholly, of a religious nature, the institution falls outside the scope of section 80G and the donation does not secure the deduction; this is so even if the trust is for the advancement of all religions.
Ratio: Section 80G is confined to institutions established for a charitable purpose that does not include a purpose substantially religious in nature; a single substantially-religious object disqualifies the institution (subject only to the later 5-per-cent tolerance in sub-section (5B)).
Relevance: The leading Supreme Court authority on the religious-purpose limitation; decisive whenever a donee's objects include a religious element.
Cluster C-2 : Scope of enquiry at the approval stage
N. N. Desai Charitable Trust v. CIT (2000) 246 ITR 452 (Gujarat High Court)
Facts: The Commissioner refused approval under section 80G(5) by, in effect, assessing whether the institution's income would actually be exempt, rather than examining its eligibility for approval.
Issue: What is the scope of the Commissioner's enquiry when granting approval under section 80G(5) — examination of the objects and entitlement to approval, or assessment of the institution's income.
Held: The High Court held that at the approval stage the authority examines whether the institution's objects are charitable and whether the conditions of section 80G(5) are satisfied; it does not, at that stage, make an assessment of the institution's income or pre-judge the exemption — that is for the assessment of the institution.
Ratio: Approval under section 80G(5) is a distinct exercise from assessment; the enquiry is into eligibility (objects and conditions), not into the quantum or actual exemption of the institution's income.
Relevance: The standard authority delimiting the approval enquiry; relied on in resisting over-broad scrutiny at the approval stage.
Cluster C-3 : Mode of donation, donations in kind and CSR
Statutory conditions — sub-section (5D), donations in kind, and Explanation 2 (CSR)
Facts: A donor makes a cash donation exceeding Rs 2,000, or donates goods, or claims a CSR contribution as a section 80G donation.
Issue: Whether such donations qualify for the deduction.
Held: A donation exceeding Rs 2,000 not made by a non-cash mode is disqualified (sub-section (5D)); a donation in kind does not qualify (only sums of money do); and a sum treated as CSR expenditure under the Companies Act is, by Explanation 2, generally not eligible, except donations to the specified funds (such as the Swachh Bharat Kosh and the Clean Ganga Fund).
Ratio: The deduction is confined to monetary donations made (above Rs 2,000) by a non-cash mode, excluding gifts in kind and (in general) CSR contributions.
Relevance: The day-to-day compliance rules that determine the bulk of section 80G disallowances in practice.
Editorial note on sourcing
Editorial scheme summary prepared from the Income-tax Act, 1961 as amended by the Finance Act, 2025, read with the Finance Act, 2026; verbatim bare-Act text is carried in the companion Block-1 treatise file. Case law is restricted to reported Supreme Court / High Court authority verified against standard law reports (ITR/Taxman/CTR). Where a deduction is documentary and lightly litigated, that is stated candidly and the governing statutory/administrative material is given.