In a significant move announced on July 2, 2026, the Income Tax Department has provided a crucial reprieve for charitable and religious trusts by permitting the condonation of delays in filing Form 10AB. This decision directly impacts Section 80G of the Income-tax Act, 1961, which allows taxpayers to claim deductions on donations made to approved institutions. The relief ensures that eligible trusts can renew their registrations, thereby allowing donors to continue benefiting from tax deductions.
Why the Delay Condonation Was Necessary
Under existing regulations, trusts with valid Section 80G approval are required to apply for renewal by submitting Form 10AB at least six months before their current approval expires. For many trusts whose 80G approval was slated to end on March 31, 2026, the deadline for Form 10AB submission was September 30, 2025.
However, a considerable number of organizations failed to meet this deadline, leading to the rejection of their applications solely due to the delay. Following numerous representations from these affected charitable bodies, the Central Board of Direct Taxes (CBDT) reviewed the situation and opted to condone the delays. The circular issued by the CBDT authorizes jurisdictional Principal Commissioners or Commissioners of Income Tax to process these belated applications and issue orders by December 31, 2026.
Benefits of Section 80G for Taxpayers
Section 80G plays a vital role in encouraging charitable giving by enabling taxpayers to reduce their taxable income through donations. It's important to note that this deduction is exclusively available under the old tax regime and only when donations are made to institutions holding valid 80G registration.
Types of Donations and Deductions:
- 100% Deduction (No Limit): Donations to specific funds like the Prime Minister's National Relief Fund, Prime Minister's CARES Fund, and the National Defence Fund.
- 50% Deduction (No Limit): Contributions to institutions such as the Jawaharlal Nehru Memorial Fund or the Indira Gandhi Memorial Trust.
- 100% Deduction (Subject to Limit): Certain donations to local authorities or government institutions.
- 50% Deduction (Subject to Limit): Generally applies to contributions to registered NGOs, public charitable trusts, and notified places of worship, capped at 10% of the taxpayer's adjusted gross total income.
Conditions for Claiming 80G Deduction:
- Payment Method: Cash donations exceeding ₹2,000 are ineligible. Payments must be made through banking channels (cheque, demand draft, digital modes).
- No In-Kind Donations: Donations of goods, clothing, or other materials do not qualify for tax benefits.
- Documentation: Donors must obtain a valid receipt from the charitable institution, detailing the institution's name, donor's name, donation amount, and the trust's valid 80G registration number.
- Form 10BE: The donee institution is required to issue Form 10BE, which serves as the donation certificate for claiming the deduction during Income Tax Return (ITR) filing. Taxpayers can also verify the institution's registration via the Income Tax Department's Exempted Institutions Utility.
Compliance Requirements for Trusts
Charitable and religious trusts operate under Sections 11 to 13 of the Income-tax Act, which provide tax exemptions for income utilized for approved charitable or religious objectives. To avail these exemptions, trusts must obtain registration under Section 12AB and adhere to strict conditions, including maintaining proper books of account, undergoing audits, and timely filing of income tax returns.
Unlike the previous system where approvals were often perpetual, most Section 12AB and Section 80G registrations are now valid for a period of five years, necessitating periodic renewal through Form 10AB. The latest CBDT circular offers a crucial, one-time opportunity for eligible trusts that missed the September 2025 deadline to regularize their registrations. Once approved, donors contributing to these organizations will continue to be eligible for tax deductions under Section 80G, in accordance with the provisions of the Income-tax Act.