Procedure for Filing Application for Trust under Section 80G of Income-tax Act, 1961

Introduction and statutory backdrop

Section 80G of the Income-tax Act, 1961 provides for a deduction to donors who make contributions to specified funds or charitable institutions. The legal text enumerates the categories of funds and institutions and prescribes the quantum of deduction (50% or 100%, with or without restriction) available to the donor. An entity seeking to be a notified ‘donee’ for purposes of Section 80G must first demonstrate that it is an institution established for charitable purposes as defined in Section 2(15) and, in practice, must secure registration under Section 12A/12AB to substantiate its charitable character before the assessing authority. The procedural and substantive tests applied by the Commissioner (Exemptions) are therefore twofold: (i) whether the entity’s objects and activities constitute charitable purposes and (ii) whether the entity complies with governance and financial transparency norms required of an exempt entity.

Key statutory provisions and their practical meaning

Several statutory provisions bear directly on an 80G application:

1. Section 2(15) — Definition of ‘charitable purpose’

As amended by the Finance Act, 2008 (effective 1 April 2009) Section 2(15) defines ‘charitable purpose’ to include relief of the poor, education, medical relief, preservation of environment, and the advancement of any other object of general public utility (GPU). The amendment removed the absolute bar that earlier proscribed carrying on any activity for profit, thereby permitting incidental commercial activity if it is in furtherance of charitable objects and the surplus is applied to those objects. The Supreme Court’s recent clarifications (see para on case law) provide authoritative tests for when commercial activities are incidental rather than primary.

2. Section 11 and Section 12A/12AB — Conditions for exemption

Section 11 provides exemption to income applied for charitable or religious purposes. Section 12A/12AB (registration) is the gateway: exempt status and many downstream benefits hinge on valid registration. Recent administrative guidance from the Income-tax Department stresses that registration under Section 12AB is mandatory to claim exemption. Internal departmental advisories also require trusts to keep registration renewed and to adhere to filing timelines to maintain validity.[1]

3. Section 80G — Deduction to donor and scope of approvals

Section 80G lists specific funds and institutions eligible for donor deduction. The Commissioner (Exemptions) issues approvals under Rule 11AA and Form No.10G is the prescribed application for grant or continuance of approval under section 80G(5)(vi). The certificate may specify the percentage of deduction (50% or 100%) and impose conditions.

Interpretation of ‘charitable purpose’ — judicial guidance

Judicial interpretation significantly informs departmental scrutiny. In a series of landmark judgments culminating in Supreme Court pronouncements (2022), courts clarified the meaning of ‘general public utility’ and the test to ascertain whether activities generating revenue are incidental. The upshot is that:

• A formalistic prohibition on any commercial activity no longer stands; the court examines whether the activity is ancillary to the charitable object and whether the proceeds are applied to that object.
• The ‘test of predominant activity’ is applied: if commercial operation is primary and the charitable application secondary, exemption may be denied.
• The presence of reasonable user-fee/charges for services provided (e.g., vocational training, modest fees in a school) does not automatically disqualify charitable status, provided surplus is channelled to charitable objects and governance ensures no private benefit to trustees.

Practitioners must therefore prepare evidence (curricula, beneficiary lists, fee policy, accounts showing application of surplus) when an activity involves fee receipts. These judicial positions are reflected in the Department’s guidance and recent case law (see footnotes).[2][3]

Eligible objects and examples

The objects that are typically accepted by the Commissioner for 80G approvals include but are not limited to:

• Relief of the poor and indigent (direct relief, food distribution, shelters).
• Advancement of education (schools, scholarships, vocational training for public benefit).
• Medical relief (public hospitals, mobile clinics, public health camps).
• Preservation of environment, monuments and heritage, and disaster-relief activities.
• Advancement of other objects of general public utility (community development, rural development) provided such activities are not primarily commercial.

Examples:

• A rural trust running free mobile medical camps and subsidised dispensaries ordinarily falls within medical relief.
• A society running nominal-fee skill training for disadvantaged youth may still qualify under ‘advancement of education’ if records demonstrate public-spirited conduct and that fees are not a device for private enrichment.
• Running an income-generating dairy by a trust is acceptable if the dairy supports primary charitable programs and trustees receive no undue benefit.

Detailed step-by-step procedural workflow to obtain 80G approval

This section provides a granular, compliance-first workflow that a trust should follow. It is written as actionable steps for immediate implementation.

Step 0 — Pre-application governance and legal housekeeping

• Ensure the trust deed or memorandum expressly contains charitable objects aligned with Section 2(15). Any ambiguous clause that permits private benefit should be removed or clarified by an amendment passed in trustees’ meeting and registered.

• Ensure Board minutes evidence adoption of policies for receipt and utilisation of donations, conflict-of-interest, investment and expense policies.

• Obtain/confirm registration under the appropriate local law (Trusts Act/Societies Act/Section 8 company) and ensure PAN is correct and active.

Step 1 — Secure/confirm registration under Section 12A/12AB

Practically, many Assessing Officers will insist that 12A/12AB registration is in place before processing 80G. If the registration is pending, file 12A/12AB application concurrently. Attach acknowledgement of 12A/12AB application with Form 10G if pending.

Step 2 — Assemble the documentary pack (exhaustive list)

1. Duly filled Form No.10G.

2. Affidavit/declaration by authorised signatory.

3. PAN card copy of the trust.

4. Registration certificate (Trust/Society/Section 8 company).

5. Section 12A/12AB registration certificate or application acknowledgement.

6. Trust deed / memorandum & articles (certified copy).

7. Audited financial statements for the last three financial years (if trust exists less than 3 years, then since inception).

8. Project-wise ledger and sample vouchers showing application of funds to charitable objects.

9. Annual reports, beneficiary registers, attendance sheets, fee policy, syllabus (for educational institutions), medical reports (for hospitals).

10. Bank statements (for the grant period and prior two years) and cancelled cheque of the trust for verification.

11. List of donors (names, amount, PAN where available) and copies of donor receipts.

12. Minutes showing appointment of auditors and adoption of financial statements.

13. Proof of office address and NOC if premises rented.

14. Any prior orders or correspondence with the tax department.

Step 3 — Filling Form 10G — practical drafting points

• Ensure that ‘objects of the trust’ entered in Form 10G are verbatim to the deed. Any mismatch triggers clarifications.
• Describe activities precisely—avoid narrative fluff. Provide project-wise budget and actuals.
• Disclose any commercial activities and provide rationale & accounting treatment for surplus — transparency reduces risk of post-facto rejection.
• Provide the name and designation of the authorised signatory; ensure signature and name match the resolution on record.
• If the trust has multiple projects, specify which projects the approval is sought for (some approvals are project-specific).

Step 4 — Submission and tracking

• Prefer electronic filing via the Income-tax e-filing portal where available, and upload the complete pack in PDF. Where physical submission is required, prepare a cover letter, index of documents and take acknowledgement.
• Maintain an indexed binder and a ‘submission diary’ recording dates, file numbers and officer names during communication.
• On receipt of queries from the CIT, respond within stipulated time with organized annexures and point-wise replies. When supplying voluminous records, include a short executive summary to guide the reviewer.

Step 5 — Dealing with scrutiny, inspection and queries

• The CIT may call for physical verification of premises or beneficiaries. Prepare a site visit pack — site photos, beneficiary interview summaries, and a compliance checklist.
• For receipts from corporate donors, prepare confirmation letters that donations were voluntary and not in exchange for services (essential for CSR-linked donations).
• If donations were received in-kind, provide documentary proof of valuation, conversion to cash (if applicable) and accounting treatment.

Step 6 — Receiving approval and conditions attached

• The approval will indicate the percentage of deduction (50%/100%) and may impose conditions: separate ledger for restricted funds, project-specific utilisation, timeframe for utilisation, or requirement to obtain a utilization certificate for specific grants.
• Keep digital and physical copies of the approval order and ensure that donation receipts reference the 80G certificate number for donor use.

Common reasons for rejection, cancellation and risk mitigation

Grounds frequently relied upon by the tax department to deny or cancel 80G approval include:

1. Objects permitting private pecuniary benefit or transfer of trust assets to founders.

2. Predominant commercial business in comparison with charitable activity (the ‘predominant activity’ test).

3. Absence of audited accounts or discrepancy between audited statements and bank records.

4. Donations in cash without proper receipts or anonymous large cash inflows causing AML concerns.

5. Failure to maintain separate accounts for specific project grants or misapplication of restricted funds.

Risk mitigation practices:

• Adopt a written donation policy and receipts consistent with 80G wording.
• Use proper treasury controls for donations and segregate restricted funds.
• Keep detailed minutes evidencing application of funds and independent oversight (audit committee).
• Avoid related-party transactions that could be construed as private benefit.

Selected case-law and statutory footnotes — detailed discussion

This section provides decisive cases and statutory references that practitioners commonly rely upon. Each entry below includes a short summary and practical takeaway.

1. Interpretation of Section 2(15) — Supreme Court (landmark series of cases, 2022)

Summary: The Supreme Court clarified the scope of ‘general public utility’ and the proviso to Section 2(15), permitting certain revenue-generating activities if they are incidental and applied to charitable objects. Practical takeaway: Fee-generating activities will not ipso facto disqualify charitable status; evidence of application of surplus to charitable activities is critical.[4]

2. 12A/12AB Registration and protection against arbitrary denial

Summary: High Courts and ITAT decisions have consistently emphasized that once 12A/12AB registration is granted, benefits under sections such as 80G should not be withheld unless registration is cancelled by the competent authority after due process. Practical takeaway: Obtain and preserve 12A/12AB registration before or at the time of 80G application; any departmental dissatisfaction should follow the formal cancellation route rather than ad-hoc denial.[5]

3. Voluntary nature of donation — ITAT/Mumbai and other tribunals

Summary: Courts have repeatedly held that donations must be voluntary and not coupled with material consideration. For CSR payments, the jurisprudence is evolving; recent ITAT decisions have accepted voluntary CSR payments as eligible when no quid pro quo exists. Practical takeaway: Obtain donor declarations confirming voluntariness and avoid contracts that create reciprocal obligations tied to donations.[6]

4. Case example — Raipur-based society (HC upholding ITAT)

Summary: The Chhattisgarh High Court recently upheld an ITAT order granting 80G to a society despite the department’s objections about commercial activities, affirming that denial without cancellation of 12A was impermissible. Practical takeaway: Judicial precedence supports trusts where processes are followed and 12A exists. Document governance thoroughly and challenge arbitrary denials promptly in appellate forums.[7]

Corporate case studies — two detailed illustrations with numbers

Case study 1 — Seva Shiksha Trust (expanded)

Background: Seva Shiksha Trust (Rajasthan) runs vocational training centres and scholarships. It applied for 80G after two years of operation. Financial summary (FY):

• Donations received: ₹10,00,000
• Grants for specific project: ₹3,00,000 (restricted)
• Fee receipts (nominal): ₹2,00,000
• Expenditure on charitable activities: ₹9,00,000
• Admin costs: ₹1,00,000

Material facts and application approach:

• The trust uploaded curricula, beneficiary lists, photographs of sessions, and audited accounts showing that fee income was 16.7% of total receipts — below the 20% de minimis used in departmental guidance for incidental commercial activity (where applicable).
• Outcome: Approval granted for 50% donor deduction prospectively for general donations; restricted grants required separate accounting.

Numerical illustration for donors:

• Donor A contributes ₹2,00,000 to Seva Shiksha Trust. If 50% of donation is deductible, taxable income reduces by ₹1,00,000. Depending on donor’s marginal tax rate (e.g., 30%), tax saved ~ ₹30,000 plus cess.
• For corporate donors, CSR accounting should separately identify donation and ensure it qualifies as voluntary to claim both CSR compliance and 80G benefit where permissible.

Case study 2 — Corporate CSR and 80G interplay

Background: Company X makes CSR payment ₹5,00,000 to Trust Y holding 80G certificate. Issue: Whether the company may claim 80G deduction and treat the expense as CSR compliance simultaneously.

Practical handling:

• Document the payment as voluntary with no reciprocal benefit. Obtain trustee confirmation and trust’s 80G certificate details on receipt.
• Company must maintain internal CSR committee minutes and show alignment with Schedule VII objectives.
• Outcome: If payment is clearly voluntary and not compensatory, company may rely on ITAT precedents that have accepted CSR payments as eligible donations for 80G purposes — note jurisprudence is context-specific and fact-sensitive.

Annex A — Model documents and templates

Annex A1 — Sample donor receipt (text)

[Name of the Trust]

80G Certificate No.: [xxxx]

PAN: [xxxx]

Receipt No.: [xxxx] Date: [dd/mm/yyyy]

Received from: [Donor Name and Address]

Amount (in words and figures): ₹________

Mode of payment: Cheque/Online/RTGS/NEFT/Cash (if cash, note limit and PAN requirements)

PAN of Donor (if applicable): __________

This is to certify that the above donation is voluntary and that no goods or services were provided in return to the donor. The donation is eligible for deduction under Section 80G of the Income-tax Act, 1961 subject to the provisions of the Act and the conditions of the 80G approval.

Authorised signatory:

(Signature, Name, Designation and Seal)

Annex A2 — Sample Table of documents to file (index)

1. Form 10G (signed and scanned)

2. Trust deed (certified copy)

3. 12A/12AB registration (or acknowledgement)

4. Audited financial statements (last 3 years)

5. Minutes (extracts) on acceptance of donations and application of funds

6. Bank statements and cancelled cheque

7. Project reports and photographs

8. Donor list and receipts (sample)

Annex B — Litigation strategy and appeals

If the Commissioner issues a show-cause notice or denies an application:

1. Immediate steps:

• Prepare a point-by-point reply, attach documentary evidence and request personal hearing.
• Where denial is based on activity being commercial, produce beneficiary evidence, application of surplus, audited trail and governance minutes.

2. Administrative appeals:

• File appeal to the Commissioner (Appeals) or the procedural channel specified within the order (adhere to timelines).

3. Tribunal and High Court:

• If departmental appeals fail, file appeal to ITAT. Preserve interim relief options; depending on urgency, courts have in certain cases granted interim protection.

4. Judicial approach:

• Focus on recent Supreme Court and High Court precedents on Section 2(15) and 12A protections. Emphasise statutory registration and due process lapse if denial was ex parte.

Conclusion and practitioner checklist

Concluding observations

Obtaining and retaining 80G approval requires a blend of sound drafting in the trust deed, transparent governance, meticulous accounting and proactive documentation of charitable activities. The law recognizes modern revenue models for charities but evaluates them closely on substance. Trustees and advisors must therefore adopt conservative governance measures, avoid related-party pitfalls and maintain a clear audit trail for the use of funds.

Short checklist for immediate implementation

• Confirm 12A/12AB registration status.
• Amend deed to remove any provision that could be construed as private benefit.
• Prepare and audit accounts for last three years.
• Create a Form 10G pack with indexed documents.
• Issue compliant receipts with 80G certificate reference.
• Adopt donor-acknowledgement and conflict-of-interest policies.
• Maintain project-wise ledgers and preserve donor communications.

Appendix: Footnotes and selected primary sources

Footnote references (selected authoritative online sources and judicial commentary)

[1] Income Tax Department — Section 80G text and administrative guidance: https://incometaxindia.gov.in (see ‘Acts’ and ‘Guidance for Trusts’). (Accessed 2025). (See: Section 80G text).

[2] Supreme Court clarifications on Section 2(15) and ‘general public utility’ (see Grant Thornton summary and Cyril Amarchand commentary, Oct 2022).

[3] Income-tax Department tutorial on taxability of charitable trusts and the 20% de minimis rule for incidental commercial receipts: https://incometaxindia.gov.in/tutorials/76.taxability-of-income-of-charitable-or-religious-trusts.pdf.

[4] Form No.10G — Prescribed format and Rule 11AA: (PDF copies available on departmental sites and practitioner portals).

[5] Recent tribunal decisions on CSR payments and voluntariness (ITAT Mumbai; see TaxGuru and recent news summaries, 2025).

[6] Recent High Court upholding ITAT decision granting 80G to a Raipur society (Times of India coverage).

[7] India Code / Official PDF of Income-tax Act, 1961.