Charitable trusts are entities established under Section 8 of the Companies Act 2013 or registered under the Registration of Society Act and the Indian Trust Act. The term "Charitable Purpose" is defined in Section 2(15) and encompasses activities such as aiding the poor, promoting education, providing medical relief, conserving historic monuments, and advancing general public welfare. Public charitable trusts fall within the concurrent list of the Indian Constitution. Various religious enactments, such as The Hindu Religious Institutions and Charitable Endowments Act, 1997, and the Muslim Wakf Act, 1954, are also part of the realm of charitable trusts. However, not all religious institutions receive the same tax benefits as defined in the Income Tax Act.

Income Tax Benefits for Charitable Institutions

12A Registration

This registration, granted by the Income Tax Authority to charitable trusts and non-profit organizations, aims to exempt them from taxation. Entities registered under Section 8 of the Companies Act 2013, such as trusts, charitable organizations, and non-profit organizations, fall under the purview of Section 8 of the Companies Act. The Income Tax Act incorporates several provisions related to tax exemptions for such incorporations, including Section 12A, 12AA, and 80G.

Benefits of 12A Registration

  1. Tax-Free Income: Income received by these organizations is exempt from taxation.
  2. Accumulation of Income: Organizations registered under 12A can set aside or accumulate income, with the condition that the set-aside income does not exceed 15% of the total received income.
  3. Eligibility for Grants: NGOs registered under 12A are eligible to receive funds from both domestic and international sources.
  4. One-Time Registration: The registration is a one-time process and remains valid until cancellation.
  5. No Renewal Required: There is no need to periodically renew the registration.


80G Certificate

The Income Tax Department issues the 80G certification to NGOs and charitable trusts to provide tax exemptions to encourage individuals to donate funds for charitable purposes. Both residents and non-residents can contribute funds, but under the new tax regime effective from FY 2023-24, these deductions or exemptions are limited.

Benefits Under the 80G Certificate

  1. 100% Deduction without Limit: Donors can avail of 100% tax deductions without any specified caps for funds donated to entities such as the National Defence Fund, PM National Relief Fund, PM CARES Fund, and others.
  2. 50% Deduction without Limit: Donors are entitled to 50% tax exemption for funds donated to entities like the Jawaharlal Nehru Memorial Fund, PM Drought Relief Fund, and others. However, under the new tax regime, these deductions are restricted as per the Finance Act 2023.
  3. 100% Deduction with Maximum Limit: Funds donated to organizations like the Family Planning Association of India/Red Cross Society of India can be eligible for 100% deduction, subject to a maximum limit.
  4. 50% Deduction with Maximum Limit: Donations to specified places of worship, government bodies, and institutions are eligible for 50% deductions, subject to maximum limits.
  5. These tax benefits play a crucial role in incentivizing charitable giving and supporting the noble causes championed by charitable trusts and NGOs.

12A & 80 G registration – Read More

Trust Registration – Read More

Section 8 Registration – Read More