The Charitable Trust are the organizations which are incorporated under Section 8 of the Companies Act 2013 or under Registration of Society Act, Indian Trust Act. Section 2(15) defines “Charitable Purpose” which includes relief to the poor, promotion of educational activities, medical reliefs, preservation of ancient monuments or advancement of any general public utility. The Public Charitable Trust is included in the concurrent list of the Indian Constitution. Several religious enactments have also been included in the scope of charitable trust such as - The Hindu Religious Institutions and Charitable Endowments Act, 1997, Muslim Wakf Act, 1954. However it is not necessary that all the religious institutions will get the same tax concessions as in accordance with which is described under the Income Tax Act. 

Income Tax Benefits provided to the Charitable Institution 

12A Registration 

The Income Tax Authority grants registration to Charitable Trusts and Non-Profit Organizations, primarily for tax exemption purposes. This registration is extended to entities registered under Section 8 of the Companies Act 2013, including Trusts, Charitable Organizations, and Non-Profit Organizations. The Income Tax Act incorporates several provisions aimed at providing tax exemptions for such entities, notably Section 12A, 12AA, and 80G. 

Benefits of 12A Registration

  1. Income received by these organizations is exempt from taxation.
  2. Person registered under 12A can accumulate or set aside the income, however the income which ought to be set aside should not be more than 15% of the Income received by the said institutions.
  3. NGOs registered under Section 12A of the Income Tax Act are eligible to receive grants from both domestic and international sources.
  4. The registration under Section 12A of the Income Tax Act is a one-time process and remains valid until it is cancelled.
  5. No requirements to renew the registration periodically

80G Certificate 

The 80G Certification is provided to the NGO & Charitable trusts by the Income Tax Department for avail tax exemptions, the 80G is to encourage the people of the society to donate their funds for charitable purpose in lieu of which the donors get tax exemptions. The resident & non-resident both are eligible to contribute the funds but under the new tax regime FY 23-24 such deductions or exemptions are restricted.

Benefits claimed under 80G Certificate 

  1. Funds with 100% Deduction without limit : The donors can acquire 100% tax deductions without being subject to any specified standards, the funds which is eligible for such deductions are -
    1. National Defence Fund
    2. PM National Relief Fund
    3. The PM Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)
    4. National Children's Fund
    5. CM Relief Fund or the Lieutenant Governor's Relief Fund
    6. Zila Saksharta Samiti
    7. Army Central Welfare Fund
    8. Indian Naval Benevolent Fund
    9. Air Force Central Welfare Fund
    10. Andhra Pradesh CM Cyclone Relief Fund
    11. National Sports Fund
    12. National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
    13. Swachh Bharat Kosh (not being in pursuance of Corporate Social Responsibility)
    14. Clean Ganga Fund (not being in pursuance of Corporate Social Responsibility) - Only applicable to resident assessees
    15. National Fund for Control of Drug Abuse
    16. National Illness Assistance Fund
    17. National Blood Transfusion Council or State Blood Transfusion Council
    18. Medical relief fund established by a State Government for the benefit of the economically disadvantaged.
  2. Funds for 50% Deductions without limit 

The donors are entitled to 50% Tax exemption in these following funds- 

  1. awaharlal Nehru Memorial Fund
  2. PM Drought Relief Fund
  3. Indira Gandhi Memorial Trust
  4. Rajiv Gandhi Foundation

Under the new tax regime, the said deductions cannot be made eligible as per Finance Act 2023. 

  1. Funds eligible for 100% deduction subject to the maximum limit
    1. Family Planning Association of India or Red Cross Society of India
    2. Government or any authorized local authority, institution, or association dedicated to promoting family planning.
    3. Indian Olympic Association or any other recognized association or institution established in India for the development of sports infrastructure or sponsorship of sports. 
  1. Funds eligible for 50% deduction subject to the maximum limit
    1. Designated temple, mosque, gurudwara, church, or other religious sites for repairs or renovation.
    2. Government or any local authority to be utilized for any charitable purpose other than the purpose of promoting family planning
    3. Any corporation specified in Section 10(26BB) aimed at promoting the interests of the minority community.
    4. Any authority established in India either for the provision of housing accommodation or for planning, development, or improvement of cities, towns, villages, or both.
    5. Any other fund or any institution fulfilling the conditions as specified in Section 80G(5)