Tax Deduction on Donations: The Rules That Decide Whether You Get 50%, 100% or Nothing
- The deduction is unavailable under the new tax regime for most taxpayers, so before anything else, check which regime you are in — otherwise the donation gives you no tax benefit at all.
- A cash donation above ₹2,000 gets no deduction whatever the cause, so give anything substantial by bank transfer or card.
- Your claim now depends on the institution filing its statement and issuing you Form 10BE — without that certificate the deduction is effectively unsupportable.
Giving rises sharply around Diwali, and so does the assumption that every donation reduces your tax. A great many do not — not because the cause is unworthy, but because of the regime you are taxed under, the way you paid, or a certificate you never collected.
Start here: which regime are you in?
This single question decides the whole thing. The donation deduction is one of the deductions not available under the new tax regime for most taxpayers. Since the new regime is now the default, a salaried person who has not actively opted for the old regime typically gets no deduction at all for a donation.
That does not make the donation pointless — it makes it a donation rather than a tax plan. But if the tax benefit is part of your reasoning, establish your regime before you give, not at filing time when nothing can be changed.
Four categories, not one
Donations fall into four buckets, and the difference between them is large.
| Category | Deduction | Subject to the 10% limit? |
|---|---|---|
| Certain national funds — for example the Prime Minister's National Relief Fund, the National Defence Fund | 100% | No |
| Certain other specified funds and institutions | 50% | No |
| Some government and local-authority purposes, such as family planning | 100% | Yes |
| Most registered charitable trusts and NGOs | 50% | Yes |
The ordinary charity you are most likely to support sits in the last row: 50%, and subject to the qualifying limit. So a ₹1,00,000 donation to a typical NGO produces a deduction of ₹50,000 at most, not ₹1,00,000 — and possibly less, as the next section shows.
The 10% qualifying limit, worked through
For donations in the limited categories, the eligible donation is capped at 10% of your adjusted gross total income. Adjusted gross total income is your gross total income reduced by certain items, including other Chapter VI-A deductions and income taxed at special rates such as long-term capital gains.
Take someone with an adjusted gross total income of ₹12,00,000 who donates ₹2,00,000 to a registered NGO eligible for 50% with the limit:
- Qualifying limit: 10% of ₹12,00,000 = ₹1,20,000
- Donation considered: lower of ₹2,00,000 and ₹1,20,000 = ₹1,20,000
- Deduction at 50%: ₹60,000
So a ₹2,00,000 donation yields a ₹60,000 deduction — worth roughly ₹18,700 of tax at a 30% slab plus cess. Useful, and a long way from the ₹2,00,000 that people often assume.
How you pay, and what you must keep
- Cash above ₹2,000 gets nothing. Give by cheque, bank transfer, UPI or card for anything beyond a token amount.
- Donations in kind get nothing. Clothes, food, blankets and books are generous and not deductible.
- You need Form 10BE. The institution files a statement of donations received and issues you this certificate. Your claim is matched against what they filed, so a receipt alone is no longer sufficient.
- Check registration before you give. The institution must hold valid registration for this purpose. Ask for the registration number and confirm it rather than relying on a line printed on a receipt.
- Keep the bank record alongside the certificate.
The Form 10BE requirement is the change that catches people. Previously a stamped receipt carried the claim; now the deduction effectively depends on the donee's own compliance. If an institution is vague about issuing the certificate, treat that as information about the institution.
What the deduction is actually worth
It helps to see the tax saved rather than the deduction claimed, because the two are very different numbers.
| You donate | To | Deduction | Tax saved at 30% + cess |
|---|---|---|---|
| ₹50,000 | A 100% fund with no limit | ₹50,000 | ≈ ₹15,600 |
| ₹50,000 | A registered NGO (50%, within the limit) | ₹25,000 | ≈ ₹7,800 |
| ₹50,000 | Any of the above, under the new regime | Nil | Nil |
| ₹50,000 in cash | A registered NGO | Nil | Nil |
Reading down that column is the clearest argument for checking the regime and the payment mode before you give. The same ₹50,000 produces anywhere between ₹15,600 and nothing, and three of those four outcomes are decided by administration rather than generosity.
Companies and CSR
For companies there is an important separation: CSR expenditure mandated under the Companies Act is not allowed as a business deduction. Certain CSR contributions may still qualify under the donation provisions if the recipient is eligible — but the default assumption that "CSR is deductible" is wrong, and it is a recurring audit observation.
Common mistakes
- Donating under the new regime and expecting a deduction. For most taxpayers there is none.
- Assuming every donation gets 100%. The common case is 50%, with a limit on top.
- Paying more than ₹2,000 in cash. The deduction disappears entirely, not partially.
- Donating goods instead of money and expecting a deduction.
- Not collecting Form 10BE. Without it the claim is unsupportable on matching.
- Ignoring the 10% qualifying limit and over-claiming, which produces a mismatch notice.
- Treating mandated CSR as a business expense. It is specifically disallowed.
If you are deciding between regimes and want to see what your deductions are actually worth, the ITR Filing page sets out the self-filing and expert-assisted routes. Professional fees are exclusive of GST and out-of-pocket expenses at actuals.
Do it yourself in minutes — free to try, no login needed.
Open ITR Filing →Frequently asked questions
Can I claim a donation deduction under the new tax regime?
For most taxpayers, no. The donation deduction is among those not available under the new regime, which is now the default. If the tax benefit matters to your decision, confirm you are taxed under the old regime before you give — the choice cannot be fixed afterwards.
Do all donations get a 100% deduction?
No. Only certain specified national funds attract 100% without any limit. Most registered charitable trusts and NGOs attract 50%, and are additionally subject to a qualifying limit of 10% of adjusted gross total income. A ₹1,00,000 donation to an ordinary NGO therefore yields at most ₹50,000 of deduction.
Is a cash donation eligible for deduction?
Only up to ₹2,000. Any cash donation above that gets no deduction at all — not a reduced one. Pay by cheque, bank transfer, UPI or card for anything larger, and keep the bank record with the certificate.
What is Form 10BE and why does it matter?
It is the donation certificate the institution issues after filing its statement of donations received. Your claim is matched against what the institution reported, so a stamped receipt on its own is no longer enough. If a charity is evasive about issuing Form 10BE, that tells you something about the charity.
General information for FY 2026-27, not professional advice for your specific case. Rules change — verify against the latest notification or ask a KyaTax expert.
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