Regarding 80G

Extract from the attached brochur : "Please Note: Save the Children is registered as Bal Raksha Bharat in India. All donations made to Save the Children, Bal Raksha Bharat, Society Registration No. S/51101/2004 are exempt from Income Tax under section 80G of IT Act 1961 vide Director of Income Tax (Exemptions), New Delhi, Letter no. DIT (E) – 2008/B-1120/2089, dated 09-10-2007. As per amendment of Section 80G, existing approval of Save the Children - Bal Raksha Bharat which is expiring after 1st October, 2009 is in perpetuity."

Qualifying Limit:- The qualifying limits u/s 80G is 10% of the adjusted gross total income. The limit is to be applied to the adjusted gross total income. The ‘adjusted gross total income’ for this purpose is the gross total income (i.e. the sub total of income under various heads) reduced by the following:

• Amount deductible under Sections 80CCC to 80U (but not Section 80G)
• Exempt income
• Long-term capital gains
• Income referred to in Sections 115A, 115AB, 115AC, 115AD and 115D, relating to non-residents and foreign companies

Donations to the institute are eligible for 50% deduction subject to 10% of adjusted gross total income.

Deduction under 80G is not happening as per the above clarification.  I came across cases where only the deduction under 80 G is limited to 5% of the Adjusted Gross Total Income (AGTI) instead of 10%.  To be more clear in a case where 50% donation is more than the 10% of AGTI, the system should allow 10% of AGTI  but it is limited to 5% only.  As per my understanding, the rule position is as follows:

Category 1: 100% donation

Category 2: 50% of the donation amount

Category 3: 100% donation amount subject to 10% of AGTI

Category 4: 50% donation amount subject to 10% of AGTI.

In case of 3 & 4 above Either 100% (or 50% as the case may be) of the donation amount or 10% of AGTI amount whichever is less  is eligible for deduction.  In case a tax payer donates some amount under both categories both put together will be limited to 10% of AGTI in case donation amount is more.  Can anybody clarify on the above whether my understanding is correct.