Depending on the category of donation, the maximum donating limit for the Income Tax Act Section 80G deduction may vary. While in some cases, there is no maximum limit set for the deduction; while in other cases, the 80g tax exemption limit is set at a 10% of the adjusted gross total income of the charity donor.
There are 4 categories of donations made to NGOs or charitable funds, of which, categories 1 and 2 cover donations that are made to particular organisations or funds. Category 1 and 2 donations are eligible for 100% and 50% deductions, respectively, and have no qualifying or maximum limit.
Donations made towards the promotion of Family Planning, to any approved local authority or to the government fall under Category 3, whereas donations made to almost all other approved NGOs generally come under Category 4. Category 3 and 4 donations are eligible for 100% and 50% deductions, respectively, subject to a qualifying or maximum limit. Under 80G, any donation in categories 3 & 4 must not exceed 10% of the taxpayer’s adjusted gross total income, for it to make the 80G exemption list of 80G tax exemptions.
