Donor Approval of Charitable Entities From Section 80G To RNPO Framework Under Income-Tax Act, 2025

DONOR APPROVAL OF CHARITABLE ENTITIES – From Section 80G to RNPO Framework under the Income-tax Act, 2025

Approval for donor deduction has always been a crucial aspect of charitable institutions, as it directly impacts their ability to mobilise funds. Under the earlier regime, this was governed by Section 80G, which enabled donors to claim tax deductions on contributions made to eligible institutions. With the introduction of the new Act, this concept has undergone a structural transformation and is now embedded within the Registered Non-Profit Organisation (RNPO) framework.

DONOR APPROVAL UNDER EARLIER LAW – SECTION 80G

Under the earlier regime, Section 80G operated as a separate and independent approval mechanism, distinct from registration under Section 12AB. An organisation seeking to provide tax benefits to its donors was required to obtain specific approval from the Commissioner of Income-tax (Exemptions).

The approval process involved examination of:

• The charitable nature of objects
• The genuineness of activities
• Compliance with prescribed conditions

Such approval was generally granted for a fixed period, thereby requiring periodic renewal. Even where an organisation was already registered under Section 12AB, it was still necessary to independently satisfy the conditions of Section 80G.

The law also empowered the authorities to withdraw approval where:

• Activities were not genuine
• Funds were misapplied
• Conditions of approval were violated

Thus, the framework functioned as a parallel approval system, operating alongside registration, with its own compliance and renewal requirements.

DONOR APPROVAL UNDER NEW RNPO FRAMEWORK

Under the new Act, the concept of Section 80G has been absorbed into the RNPO framework, and no longer exists as a standalone provision. Donor eligibility is now intrinsically linked to the organisation’s status as a Registered Non-Profit Organisation.

This marks a fundamental shift from a dual approval system to a unified compliance-based framework. Approval for donor deduction is no longer viewed as a separate certification, but as a natural consequence of RNPO recognition and compliance.

The authority continues to examine:

• The charitable nature of objects
• The genuineness of activities

However, the scope now extends to:

• Transparency in utilisation of donations
• Financial discipline
• Integrity of funding sources and application

FORMS FOR DONOR APPROVAL – OLD VS NEW

(A) Forms under Earlier Section 80G

(B) Forms under New RNPO Framework

Under the new regime, these forms are no longer mere approval tools but operate within a dynamic compliance environment, where donor eligibility is continuously assessed.

KEY DIFFERENCES – 80G vs RNPO

PROCEDURAL FLOW UNDER NEW FRAMEWORK

The process of enabling donor deduction under the RNPO framework broadly involves:

1. Registration as RNPO

2. Compliance with Chapter XVII provisions

3. Filing of prescribed forms (as applicable)

4. Verification by CIT (Exemptions)

5. Recognition of eligibility for donor benefit

Unlike the earlier regime, donor approval is not an isolated process but is embedded within the overall compliance status of the organisation.

TRANSITION OF EXISTING 80G APPROVALS

Approvals already granted under Section 80G are expected to continue under the new regime, subject to alignment with RNPO provisions. Such approvals will be treated as part of the integrated RNPO framework, and their continuation will depend on compliance with the new law.

While the original validity period may continue, the emphasis has shifted to ongoing compliance and transparency, rather than mere possession of approval.

SHIFT FROM PERIODIC APPROVAL TO CONTINUOUS VALIDATION

Under the earlier regime, donor approval was subject to mandatory periodic renewal, requiring organisations to re-establish eligibility at fixed intervals. Under the new framework, this concept has been significantly diluted.

Donor eligibility now survives based on:

• Continuous compliance
• Proper utilisation of funds
• Transparency in operations

Thus, approval is no longer a one-time certification, but a continuously evaluated status.

POLICY SHIFTS IN DONOR APPROVAL FRAMEWORK

1. From Dual Approval to Unified System

Earlier, registration (12AB) and donor approval (80G) operated independently. Now, both are integrated within RNPO.

2. From Approval to Accountability

Earlier, approval once granted ensured donor benefit. Now, it depends on continuous compliance.

3. Enhanced Scrutiny of Donations

Authorities now examine:

• Source of donations
• Utilisation patterns
• Funding transparency

4. Documentation-Driven System

Shift from explanation-based to evidence-based validation.

The transition from Section 80G to the RNPO framework represents a fundamental shift from a procedural approval model to a substance-driven compliance model. Donor approval is no longer a separate privilege but is intrinsically linked to the organisation’s overall conduct and adherence to regulatory standards. In essence, Donor eligibility now flows from credibility, not merely certification. From separate 80G approval to integrated RNPO validation donor benefit now depends on continuous compliance, transparency, and genuine application of funds.”