Section 354 — 80G Approval | ITA 2025

Section 354 — - APPLICATION FOR 80G APPROVAL

Section 354 is the substantive equivalent of 1961 s. 80G(5) -- the foundational provision authorising charitable trusts / NPOs / specified entities to seek APPROVAL FOR 80G DONATION DEDUCTION ELIGIBILITY (under s. 133(1)(b)(ii) of 2025 Act / 1961 s. 80G). Donors to approved entities qualify for 50% / 100% deduction; without 80G approval, donations are not tax-deductible. FA 2020 watershed restructuring: replaced perpetual approval with PERIODIC RENEWAL (3-5 year cycles); mandatory donor-certificate (Form 10BE) issuance; mandatory trust-side annual statement (Form 10BD) reporting all donations; substantial compliance overlay for donor-side deduction. Practitioner-grade rule: every charitable trust seeking donor-deductibility status must navigate this provision; FA 2020 / FA 2021 changes brought significant compliance costs.

Statutory text — Income-tax Act, 2025

Marginal note -- Application for approval u/s 133(1)(b)(ii)

(1) A registered non-profit organisation or a person referred to in Schedule VII (Table: Sl. No. 1) may, for the purpose of section 133(1)(b)(ii), make an application for approval in such form and manner, as may be prescribed, to the Principal Commissioner or Commissioner, subject to the following conditions:—

(a) it is not expressed to be for the benefit of any particular religious community or caste;

(b) it is established in India for a charitable purpose and does not incur any expenditure of an amount exceeding 5% of its total income during a tax year which is of a religious nature;

(c) the instrument under which it is constituted does not, or the rules governing it do not, contain any provision for the transfer at any time of the whole or any part of its assets for any purpose other than a charitable purpose;

(d) it maintains regular accounts of its receipts and expenditure;

(e) it prepares such statement for such period, as may be prescribed, and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time, as may be prescribed;

(f) it delivers to the said prescribed authority, a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under clause (e) in such form and verified in such manner, as may be prescribed; and

(g) it furnishes a certificate to the donor specifying the amount of donation within such period from the date of receipt of the donation containing the requisite particulars in manner, as may be prescribed.

(2) The application under sub-section (1) shall be made in respect of the cases referred to in column B of the Table below within the time limit provided in column C of the said Table and the Principal Commissioner or Commissioner, on receipt of such application, shall follow the procedure provided in sub-sections (3) and (4), and shall pass an order in writing within the time limit provided in column D and approval, if granted, shall be valid for a period provided in column E of the said Table:

TABLE Sl. Case Time limit for Time limit for Validity of No. furnishing appli- passing the approval cation order A B C D E

1. Where the activities At any time during One month Three tax years of the applicant have the tax year from from the end commencing not commenced. which approval is of the month from the tax sought. in which appli- year in which cation is made. such applica- tion is made.

2. Where the activi- At any time during Six months Five tax years ties of the applicant the tax year from from the end commencing have commenced. which approval is of the quarter from the tax sought. in which appli- year in which cation is made. such applica- tion is made.

3. Where the applicant Within six months Six months Five tax years has provisional ap- of the commence- from the end commencing proval and activities ment of activities. of the quarter from the tax have commenced. in which appli- year in which cation is made. such applica- tion is made.

4. Where the provi- At least six months Six months Five tax years sional approval of prior to the expiry from the end following the the applicant is due of the provisional of the quarter tax year in to expire and activ- approval. in which appli- which such ities have not com- cation is made. application is menced. made.

5. Where the period At least six months Six months Five tax years for approval of a reg- prior to the expiry from the end following the istered non-profit of the said approv- of the quarter tax year in organisation is due al. in which appli- which such to expire. cation is made. application is made.

(3) Where an application has been made in any of the cases specified under sub-section (2) (Table: Sl. Nos. 2 to 5), the Principal Commissioner or Commissioner shall call for such documents or information or make such inquiries as he thinks necessary in order to satisfy himself about the genuineness of the activities, and compliance of such requirements of any other law in force, as are material for the purposes of achieving its objects, and—

(a) if he is so satisfied about the objects and the genuineness of the activities and compliance of such requirements of any other law in force, he shall pass an order in writing approving it; or

(b) if he is not so satisfied, after affording a reasonable opportunity of being heard,—

(i) shall pass an order in writing rejecting the application, where the application was made in any of the cases specified in sub-section

(2) (Table: Sl. No. 2); and

(ii) in any other case, shall pass an order in writing rejecting the application and also cancelling the approval, and send a copy of the order to the applicant and the Assessing Officer.

(4) Where an application has been made in any of the cases specified in sub-section

(2) (Table: Sl. No. 1), the Principal Commissioner or Commissioner shall pass an order granting provisional approval. [Merger of registered non-profit organisation in certain cases. 69 354A. Where any registered non-profit organisation merges with any other registered non-profit organisation, the provisions of section 352 shall not apply if, —

(a) the other registered non-profit organisation has same or similar objects; and

(b) the said merger fulfils such conditions as may be prescribed.] 7. —Interpretation Interpretation.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 -- s. 354	INCOME-TAX ACT, 1961 -- s. 80G(5)
Sub-s. (1) -- Application + 7 conditions (a)-(g)	1961 s. 80G(5) clauses
Religious-community / caste exclusion (a)	1961 s. 80G(5)(iii)
5% religious-expenditure cap (b)	1961 s. 80G(5B)
Asset-transfer restriction (c)	1961 s. 80G(5)(i)
Books of account / Form 10BD statement (d)/(e)	1961 s. 80G(5)(viii) [FA 2020]
Donor certificate Form 10BE (g) [FA 2020]	1961 s. 80G(5)(ix)
Sub-s. (2) Table -- application timing / order / validity	1961 Rule 11AA
3-tax-year provisional / 5-tax-year final cycle	1961 s. 80G(5)(vi) [FA 2020]

STATUTORY ARCHITECTURE -- SEVEN CUMULATIVE CONDITIONS

Sub-s. (1) sets out 7 cumulative conditions for 80G approval (referenced under s. 133(1)(b)(ii) for donor's deduction): (a) NOT FOR PARTICULAR RELIGIOUS COMMUNITY / CASTE: trust object must serve general public; sectarian / community-specific trusts ineligible; (b) 5% RELIGIOUS-EXPENDITURE CAP: charitable purpose primary; religious expenditure cannot exceed 5% of total income in any tax year (s. 80G(5B) framework); (c) ASSET-TRANSFER RESTRICTION: trust deed / rules must prohibit transfer of assets for non-charitable purposes; (d) REGULAR ACCOUNTS: maintain receipts and expenditure books; (e) ANNUAL STATEMENT (FORM 10BD; FA 2020 NEW): mandatory annual statement of all donations received above prescribed threshold; report donor PAN / amount / date / purpose; deliver to prescribed authority; (f) CORRECTION STATEMENT: rectification mechanism for Form 10BD errors; (g) DONOR CERTIFICATE (FORM 10BE; FA 2020 NEW): mandatory donor receipt within prescribed time post-donation; enables donor's 80G claim. PRE-FA 2020 ERA: simple compliance; perpetual approval; minimal annual reporting. POST-FA 2020 ERA: comprehensive compliance ecosystem; trust-side Form 10BD + donor-side Form 10BE; periodic renewal.

APPLICATION TABLE (sub-s. 2)

Sub-s. (2) Table specifies application timing / order time-limits / validity by case category: (I) ACTIVITIES NOT YET COMMENCED (provisional approval): application during tax year of formation; PCIT/CIT order within 1 month of FY-end; validity 3 TAX YEARS commencing from approval. (II) ACTIVITIES COMMENCED (final approval): application within 6 months of activity commencement OR 1 year before expiry of provisional approval (whichever earlier); PCIT order within 6 months of FY-end; validity 5 TAX YEARS. (III) RENEWAL OF EXISTING APPROVAL: application 6 months before expiry; validity 5 TAX YEARS post renewal. (IV) CASES WHERE PROVISIONAL EXPIRED / NEW REGISTRATION: specific timelines per Rule. PRACTITIONER: maintain renewal calendar; missed deadlines = lapse of approval = donor's 80G claim disallowed retrospectively in some cases.

FORM 10BD AND FORM 10BE WORKFLOW

FA 2020 introduced TWO-FORM ECOSYSTEM: (I) FORM 10BD (Trust-side annual statement): (a) Trust must file annually by 31-MAY following FY-end; (b) Lists all donors with PAN / amount / date / purpose; (c) Donations BELOW INR 500 / non-corporate-donor / specified categories may have relaxations; (d) Late filing attracts s. 271K penalty (INR 200/day, max INR 1L). (II) FORM 10BE (Donor receipt): (a) Trust issues to each donor by 31-MAY following FY-end; (b) Donor uses Form 10BE for 80G claim in own ITR; (c) Without Form 10BE, donor's 80G claim disallowed. EFFECT: donor-trust compliance cycle integrates into single workflow; mismatch / non-issuance harms donor's deduction.

PRACTITIONER NOTES

(i) PROVISIONAL VS FINAL TIMING -- new trust: provisional 3-year first; convert to final within 6 months of activity commencement. (ii) RENEWAL CALENDAR -- 5-year cycle; apply 6 months before expiry; missed deadline lapses approval. (iii) FORM 10BD ANNUAL FILING -- 31-May post-FY mandatory; comprehensive donor-list reporting. (iv) FORM 10BE DONOR ISSUANCE -- 31-May; without this, donor's 80G claim disallowed. (v) RELIGIOUS-EXPENDITURE 5% CAP -- monitor; restructure activities if approaching cap. (vi) ASSET-TRANSFER COMPLIANCE -- trust deed must prohibit non-charitable transfers; review and amend if needed. (vii) BOOKS OF ACCOUNT -- regular accounting; auditable; cash receipts > INR 2,000 banking-only (s. 271AAD related). (viii) PCIT REJECTION -- appellate route to ITAT directly within 60 days. (ix) DONOR-SIDE COORDINATION -- educate donors about Form 10BE requirement; reconcile annually.

CROSS-REFERENCES

Section 133(1)(b)(ii) -- Donor's 80G deduction (cross-reference).
Section 332 -- Trust registration (precondition).
Section 351 -- Specified violations / cancellation.
Section 352 -- Accreted income tax.
Section 350 -- Permitted modes of investment.
Schedule VII Table Sl. No. 1 -- Specified persons eligible.
Income-tax Rules, 2026 r. 11AA / 17B equivalent -- procedural framework.
Form 10BD -- annual donation statement.
Form 10BE -- donor certificate.
Section 271K -- Form 10BD non-filing penalty.

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