Section 80G of the Income-tax Act, 1961 provides a tax deduction to eligible
donors for qualifying donations made to specified funds, charitable institutions
and other eligible organisations.
The important point is that registration under Section 12AB and approval under
Section 80G are different.
Section 12AB registration is primarily relevant to the charitable institution's claim for exemption under Sections 11 and 12.
Section 80G approval enables eligible donors to claim a deduction for qualifying
donations made to the institution, subject to the conditions and limits
prescribed by law.
Therefore, a charitable trust, society, NGO or Section 8 company intending to
receive donations that qualify for deduction in the hands of donors should
examine whether it is required to obtain and maintain approval under Section
80G.
The old expression "Section 80G(5) approval" continues to be widely used, but
the present application and approval framework has been substantially changed
from the earlier system based on Form 10G.
Section 80G provides a deduction to a donor in respect of certain donations made
to specified funds, institutions and organisations.
The deduction is available subject to:
the nature of the donee institution;
the nature of the donation;
the mode of payment;
the applicable percentage of deduction;
statutory monetary limits;
conditions prescribed for the donee; and
compliance and reporting requirements.
Therefore, every donation made to a charitable organisation is not automatically
eligible for deduction under Section 80G.
Is Section 80G Approval Necessary for a Charitable Institution?
No, Section 80G approval is not mandatory merely because an organisation is
charitable.
However, if a trust, society, NGO or Section 8 company wants eligible donors to
claim deduction for qualifying donations made to it under Section 80G, it
generally needs to satisfy the conditions for approval under the provision.
This distinction is important:
Section 12AB registration gives the institution a framework for claiming
income-tax exemption; Section 80G approval provides tax-deduction benefits to
eligible donors.
An institution can therefore have Section 12AB registration without necessarily
having Section 80G approval.
Depending upon the statutory conditions, Section 80G can apply to eligible:
charitable trusts;
charitable societies;
Non-Governmental Organisations (NGOs);
Section 8 companies;
other charitable institutions;
certain funds and institutions specifically covered by Section 80G.
The old term "Section 25 company" refers to a company under the earlier
Companies Act, 1956. Under the Companies Act, 2013, the corresponding legal form
is generally known as a Section 8 company.
Incorporation as a Section 8 company does not automatically confer Section 80G
approval.
The conditions under Section 80G have evolved considerably.
For an institution seeking approval, the following broad requirements are
particularly important.
1. The Institution Must Satisfy the Statutory Conditions
The institution must fall within the category of institution or fund to which
Section 80G applies and satisfy the conditions prescribed by the Income-tax Act
and Rules.
The old practice of simply checking the five conditions reproduced in older
versions of Section 80G(5) is no longer sufficient.
The present framework also requires compliance with the registration,
application, approval, reporting and donation-related provisions introduced
through the Finance Acts.
2. Charitable Objects and Activities
The organisation should have genuine charitable objects and should carry on
activities consistent with those objects.
Its objects and activities should generally fall within the statutory concept of
charitable purpose.
Section 2(15) includes:
relief of the poor;
education;
yoga;
medical relief;
preservation of environment;
preservation of monuments or places or objects of artistic or historic interest;
and
advancement of any other object of general public utility.
Where the institution falls under the general public utility category, the
restrictions concerning commercial activities under Section 2(15) must also be
considered.
3. Section 12AB Registration
An institution claiming exemption under Sections 11 and 12 generally requires
registration under Section 12AB.
Section 80G and Section 12AB are separate provisions, but the present regulatory
framework closely connects the two.
A charitable institution should therefore generally ensure that its Section 12AB
registration is valid and that the information contained in its Section 80G
application is consistent with its registration documents.
The Income Tax Department separately identifies registration under Section 12AB
and approval under Section 80G as different compliance requirements.
4. The Institution Should Not Be Established for the Benefit of a Particular
Religious Community or Caste
The conditions of Section 80G contain restrictions concerning institutions
established for the benefit of a particular religious community or caste.
Therefore, the constitutional documents and actual activities of the
organisation should be examined carefully.
The provision also contains a limited statutory rule concerning religious
expenditure in specified circumstances.
5. Religious Expenditure
The law does not necessarily disqualify every charitable institution merely
because it incurs some expenditure of a religious nature.
Section 80G contains a specific provision restricting the deduction where an
institution incurs expenditure on religious activity beyond the statutory limit.
Under Section 80G(5B), an institution is not treated as failing the relevant
condition merely because it incurs expenditure of a religious nature, provided
such expenditure does not exceed 5% of its total income in the relevant previous
year.
Accordingly, the old statement that the institution must have absolutely no
religious expenditure is incomplete.
The statutory 5% condition should be applied where relevant.
6. Books of Account and Records
The institution should maintain proper books of account and supporting records.
The organisation should be able to establish:
donations received;
donor details;
expenditure;
application of funds;
charitable activities;
bank transactions;
assets and liabilities;
corpus donations;
grants and other receipts; and
compliance with applicable tax requirements.
Proper accounting is particularly important because Section 80G compliance now
involves substantial information reporting concerning donations.
The old procedure described in many articles is no longer applicable.
Earlier procedure
Under the earlier law, an institution generally applied in Form 10G under Rule
11AA.
That system has been replaced.
Current procedure
Applications for Section 80G approval are now made electronically under the
current statutory framework, principally through Form 10A or Form 10AB,
depending upon the circumstances.
The applicant must identify the correct statutory category before filing the
application.
The procedure is therefore broadly:
Prepare documents -> Identify correct application category -> File Form 10A/10AB
electronically -> Verification -> Processing by competent authority -> Furnish
additional information if called for -> Approval/order
Form 10A and Form 10AB for Section 80G
The correct form depends upon the circumstances of the applicant.
The current Rule 11AA/Section 80G framework should be read together with the
provisions prescribing electronic applications.
The forms and categories should not be confused with the older Form 10G
procedure.
A trust or institution should determine whether it is:
applying for initial approval;
seeking provisional approval;
seeking regular approval after provisional approval;
seeking renewal/revalidation; or
applying in another category prescribed by the current law.
The applicable form and statutory deadline depend upon the particular case.
Step 1: Obtain and Maintain Section 12AB Registration
Where the institution is claiming exemption under Sections 11 and 12, it should
first ensure that its Section 12AB registration is valid.
The constitutional documents and objects should be consistent with the
information maintained by the Income-tax Department.
Step 2: Check Eligibility
Before filing, examine:
objects of the organisation;
actual activities;
Section 12AB registration;
religious activities, if any;
books of account;
donation records;
compliance history;
return filing;
audit reports;
governing-body details; and
other statutory requirements.
Step 3: Collect Documents
Depending upon the application, documents can include:
1. Trust deed/MOA/AOA;
2. Registration certificate;
3. Section 12AB registration order/certificate;
4. PAN;
5. Details of trustees/directors/members of the governing body;
6. Activity report;
7. Accounts and financial statements;
8. Income-tax returns;
9. Details of charitable activities;
10. Details of previous approval, where applicable;
11. FCRA registration, if applicable; and
12. Other documents required by the prescribed form.
Step 4: File the Application Electronically
The application should be filed electronically using the applicable form on the
Income Tax Department's e-filing system.
The applicant should ensure that:
all mandatory fields are completed;
documents are correctly uploaded;
the correct form is selected;
information agrees with the trust deed and registration records; and
the application is properly verified.
Step 5: Respond to Notices
The competent authority may seek additional information or documents.
The organisation should respond within the prescribed time and provide clear
documentary evidence supporting:
its charitable objects;
genuineness of activities;
financial transactions;
donations;
expenditure; and
statutory compliance.
Step 6: Approval Order
If the authority is satisfied that the statutory conditions are fulfilled, the
appropriate approval/order is issued.
The organisation should preserve the approval order and carefully note:
approval number;
effective date;
validity period;
conditions;
renewal/revalidation date; and
subsequent reporting obligations.
Provisional and Regular 80G Approval
The present law distinguishes between provisional and regular approval in
specified circumstances.
A newly established institution that has not commenced sufficient activities may
fall within the provisional approval framework.
After commencing activities, it must apply for regular approval within the
applicable statutory period.
The organisation should not assume that provisional approval automatically
becomes permanent.
The exact time limit should be checked against the statutory provision and the
date of commencement of activities applicable to the institution.
Validity of 80G Approval
The validity of approval depends upon the category of approval and the statutory
provisions applicable to the institution.
The law has undergone several changes in recent years, including changes
concerning the duration of registration/approval and revalidation.
Therefore, the old statement that:
"The Commissioner may grant approval for a period up to five years and the
institution must repeatedly apply"
should not be treated as the current general rule.
The institution should refer to the approval order and the applicable provisions
of Section 80G and the Income-tax Rules to determine the exact validity period.
What is the Benefit of Section 80G Approval?
The principal benefit is available to the donor, not directly to the charitable
organisation.
Where a qualifying donation is made to an approved institution and all statutory
conditions are satisfied, the donor may claim a deduction from gross total
income under Section 80G, subject to the applicable percentage and monetary
limits.
Depending upon the category of donation, the deduction can be:
100% of the qualifying donation, or
50% of the qualifying donation,
and in some categories the deduction is subject to the prescribed qualifying
limit.
Therefore, an 80G certificate does not mean that every donor automatically
receives a 100% deduction.
Is Every Donation Eligible for 80G Deduction?
No.
The deduction depends upon the nature of the donation and the statutory
conditions.
For example, the Income-tax Act contains different categories of eligible
donations and different deduction percentages.
The donor should therefore verify the specific category applicable to the donee
organisation.
Cash Donation Restriction
A significant restriction applies to cash donations.
Under Section 80G, where the amount of a donation is made in cash and exceeds
₹2,000, deduction is not available for that donation.
Accordingly, a charitable institution should encourage donors to use traceable
modes such as:
account-payee cheque;
account-payee bank draft;
electronic transfer;
UPI or other permitted electronic modes; or
other banking channels.
Donation in Kind
Donations in kind, such as:
clothes;
food;
medicines;
furniture;
equipment; or
other goods
do not generally qualify for deduction under Section 80G because the deduction
is based on qualifying monetary donations.
An institution may accept such donations for charitable activities, but the
donor should not automatically assume that an 80G deduction is available for the
value of goods donated.
Donation Reporting and Form 10BD
One of the most important changes to the 80G regime is the introduction of
mandatory reporting of donations.
Approved institutions are required to furnish a statement of donations in Form
10BD within the prescribed time.
The institution must collect and maintain accurate donor information, including
information such as:
donor name;
PAN/Aadhaar or other prescribed identification;
address;
amount of donation;
date of donation;
mode of payment; and
other prescribed information.
The information reported in Form 10BD is used for issuing the donor's
certificate.
Form 10BE
After furnishing Form 10BD, the institution is required to issue a certificate
of donation in Form 10BE to the donor within the prescribed time.
The donor can use Form 10BE to support the deduction claimed under Section 80G.
This has fundamentally changed the compliance framework.
Earlier system
The donor primarily relied upon the donation receipt/certificate issued by the
charitable organisation.
Present system
The approved institution must:
Receive donation -> Maintain donor information -> Report donation in Form 10BD
-> Issue Form 10BE -> Donor claims eligible deduction
Therefore, accurate donor records are now extremely important.
Consequences of Incorrect Donation Reporting
The institution should take considerable care while reporting donations.
Errors in:
donor PAN;
donor name;
donation amount;
date;
mode of payment; or
other prescribed details
can cause difficulties for the donor in claiming the deduction.
The institution should therefore reconcile its:
bank statements;
donation receipts;
accounting records;
Form 10BD data; and
Form 10BE certificates.
Can a Donor Claim 80G Deduction if the Institution Does Not Have Approval?
Generally, no, where approval is a statutory requirement for the particular
category of donee.
A charitable institution may be genuinely charitable but, if it does not satisfy
the statutory conditions for Section 80G, a donor cannot simply claim deduction
because the organisation is registered as a trust, society or Section 8 company.
Therefore:
Charitable registration, 80G approval.
Is Section 12AB Registration Enough for 80G?
No.
Section 12AB and Section 80G serve different purposes.
Section 12AB
Concerned primarily with exemption of eligible income of charitable/religious
institutions under Sections 11 and 12.
Section 80G
Concerned primarily with deduction available to eligible donors for qualifying
donations.
A charitable organisation should therefore separately comply with the conditions
applicable to both provisions if it wishes to provide its donors with the
Section 80G benefit.
Difference Between Section 12AB and Section 80G
| Particulars | Section 12AB | Section 80G |
| Main purpose | Income-tax exemption for eligible charitable/religious institutions | Deduction for eligible donors |
| Benefit primarily available to | Trust/institution | Donor |
| Main provisions | Sections 11, 12, 12A and 12AB | Section 80G |
| Application | Prescribed electronic application | Prescribed electronic application |
| Forms | Form 10A/10AB, depending on case | Form 10A/10AB, depending on case |
| Donation reporting | Related compliance may apply | Form 10BD and Form 10BE |
| Automatic benefit from charitable registration? | No | No |
| Separate approval required? | Registration required for Section 11/12 exemption | Yes, where Section 80G approval is applicable |
Section 80G and Section 8 Companies
A Section 8 company is not automatically entitled to 80G approval merely
because it is incorporated for charitable purposes.
The company should:
1. have genuine charitable objects;
2. conduct activities consistent with those objects;
3. satisfy the Section 80G conditions;
4. obtain the required approval;
5. maintain proper accounts;
6. comply with donation reporting requirements; and
7. issue the prescribed donor certificate.
The expression "Section 25 company" appearing in older articles should
therefore be updated to "Section 8 company".
Section 80G and Societies
A society registered under the applicable Societies Registration law can
seek Section 80G approval if it satisfies the statutory requirements.
Society registration by itself does not establish eligibility for 80G.
The society must separately satisfy the Income-tax requirements.
Section 80G and NGOs
"NGO" is a broad descriptive term and does not itself constitute a
particular legal form.
An NGO may be organised as:
a trust;
society;
Section 8 company; or
another legally recognised entity.
Its Section 80G eligibility must therefore be determined according to its
actual legal form and the applicable Income-tax provisions.
Renewal/Revalidation of 80G Approval
The organisation must monitor the validity of its approval.
Where the law requires revalidation or renewal, the application must be
filed within the statutory period.
Failure to maintain valid approval can affect the ability of donors to claim
deduction for donations made after the approval ceases to be valid.
The institution should therefore maintain a compliance calendar covering:
Section 12AB registration;
Section 80G approval;
Form 10BD;
Form 10BE;
income-tax return;
audit report;
Form 10, wherever applicable;
FCRA renewal, where applicable; and
other statutory filings.
Latest Law: Income-tax Act, 2025
From 1 April 2026, the Income-tax Act, 2025 applies to tax years governed by
the new Act.
The new legislation reorganises and renumbers the provisions of the
Income-tax Act, 1961. Therefore, websites and older articles should not
simply reproduce the old section numbers without checking the corresponding
provisions of the 2025 Act.
For earlier assessment years and transitional matters, the Income-tax Act,
1961 remains relevant.
The organisation should therefore identify the tax year and statutory regime
applicable to the particular transaction or compliance requirement.
Charitable organisations frequently make the following mistakes:
1. Assuming 12AB automatically gives 80G
It does not.
2. Continuing to use the old Form 10G procedure
The current system has moved to electronic applications under the prescribed
forms and categories.
3. Treating every donation as eligible
Only qualifying donations satisfy Section 80G.
4. Accepting large cash donations
Cash donations exceeding the statutory limit do not qualify for deduction.
5. Incorrect donor PAN
Incorrect donor information can prevent the donor from obtaining the
expected tax benefit.
6. Failure to file Form 10BD
This can create serious compliance problems and may affect donors.
7. Failure to issue Form 10BE
The donor needs the prescribed certificate to support the deduction.
8. Assuming Section 8 incorporation is enough
Company-law status and income-tax approval are separate matters.
Before claiming or maintaining 80G approval, a charitable organisation
should ensure:
[ ] Valid constitutional documents are available.
[ ] Objects are genuinely charitable.
[ ] Section 12AB registration is valid, where applicable.
[ ] Section 80G approval is valid.
[ ] Correct application form has been used.
[ ] Bank account and accounting records are properly maintained.
[ ] Donation receipts are issued.
[ ] Cash donation restrictions are followed.
[ ] Donor PAN/details are correctly collected.
[ ] Donations are reconciled with bank records.
[ ] Form 10BD is filed within the prescribed time.
[ ] Form 10BE is issued to donors within the prescribed time.
[ ] Income-tax return is filed on time.
[ ] Audit report is furnished where applicable.
[ ] Any renewal/revalidation application is filed within the statutory
deadline.
[ ] Changes in objects or legal status are reported and dealt with as
required.
Conclusion
Section 80G approval is important for a charitable trust, society, NGO or
Section 8 company that wants eligible donors to claim income-tax deductions
for qualifying donations.
However, Section 80G approval is not the same as Section 12AB registration.
Section 12AB primarily concerns the institution's eligibility to claim
exemption under Sections 11 and 12, while Section 80G primarily provides a
deduction mechanism for eligible donors.
The procedure has also changed significantly from the one described in older
tax articles. The old Form 10G procedure and the earlier five-year approval
framework should not be presented as the current general procedure. The
current law provides electronic applications under the prescribed forms and
includes extensive post-approval donation reporting through Form 10BD and
Form 10BE.
For a charitable organisation, obtaining approval is only one part of
compliance. It must also maintain valid registration, proper accounts,
accurate donor records, timely tax filings and statutory donation reporting.
Important: The exact eligibility, application form, validity period,
deduction percentage, monetary limit and compliance requirements depend upon
the nature of the institution and the relevant tax year. For tax years
governed by the Income-tax Act, 2025 from 1 April 2026, the corresponding
provisions of the new Act and Rules should be checked before filing.
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