It depends on what you are talking about as to what the encoding decision is.

Git generally prefers UTF-8, whenever possible, because it plays nicely in C as a char*, and because it can contain any Unicode character.  Commit messages and tag messages for example are UTF-8 unless somehow otherwise specified.

For some data, Git hasn't yet specified a particular encoding, but its actually just being difficult and refusing to, because the data is derived from file names and is using the readdir() return as-is without checking the platform's LC settings.

Within JGit I think I only use this function to return the objects/info/pack file.  That file's format is actually strictly defined as being a limited subset of US-ASCII (e.g. the character "Z" cannot appear in that file, nor can a horizontal tab, let alone a smart quote or a Cyrillic character).

Calling it UTF-8 when its really US-ASCII is fine, UTF-8 is slightly more widely recognized as a character encoding these days.