CBDT vide its CIRCULAR NO.1/2010 F.No.275/192/2009IT(B)]dt. 11/01/2010 says while deducting income tax at source from salary the employer need not consider 80G payment of employee. Extract is given below:
"G. Section 80G provides for deductions on account of donation made to various funds , charitable organizations etc. Generally no
deduction should be allowed by the D.D.O. from the salary income in respect of any donations made for charitable purposes. The
tax relief on such donations as admissible under section 80G of the Act, will have to be claimed by the tax payer in the return
of income. However in cases where employees make donations to the Prime Minister’s National Relief Fund, the Chief Minister’s Relief
Fund or the Lieutenant Governor’s Relief Fund through their respective employers, it is not possible for such funds to issue
separate certificate to every such employee in respect of donations made to such funds as contributions made to these funds
are in the form of a consolidated cheque. An employee who makes donations towards these funds is eligible to claim deduction under
section 80G. It is, hereby, clarified that the claim in respect of such donations as indicated above will be admissible under section
80G on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer in this behalf - Circular No.
2/2005, dated 12-1-2005."
DEDUCTION OF TAX AT SOURCE — INCOME–TAX DEDUCTION FROM SALARIES UNDER SECTION 192 OF THE INCOME–TAX ACT, 1961