Charitable Trust Taxation explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Under the Income-tax Act, 2025 a charitable trust is taxed as a registered non-profit organisation. It registers under section 332, the old section 12AB, applies its income to its objects, and files Form No. 112, Form No. 113 and ITR-7 each year.
An earlier version of this guide said trusts register "under section 12AB" of the Income-tax Act, 2025 in Form 10A, and that 80G approval is applied for in "Form 10G". Section 12AB belongs to the repealed 1961 Act. Under the 2025 Act registration is under section 332, 80G approval is under section 354, and both are applied for in Form No. 104 or 105.
Registration under section 332
A public trust, society or section 8 company claiming the benefits of the non-profit code must be registered under section 332. It must be constituted in India for a charitable purpose under section 2(23) or a public religious purpose, and its properties must be held for the general public under an irrevocable trust.
- New trust, activities not commenced: Form No. 104 to the Commissioner of Income-tax (CPC); provisional registration in Form No. 106.
- Activities commenced, conversion or renewal: Form No. 105 to the jurisdictional Principal Commissioner or Commissioner; order in Form No. 107.
Registration is for a fixed period and must be renewed; the periods and windows are in the table to section 332(3). An application can be withdrawn within seven days of filing.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026, including assessments, appeals and penalties for those years, because of the repeal and savings provision in section 536.
Conditions for the exemption
- Registration under section 332 must be in force.
- Application of income to the charitable objects, computed under sections 335 to 344.
- No benefit to related persons — loans without adequate security or interest, excessive salaries, and sales or purchases at an inadequate price are tested under sections 351 to 353.
- Investments only in the modes permitted by section 350 read with Schedule XVI.
- Commercial activity only within sections 345 and 346.
- Books and audit under sections 347 and 348.
The application rule and accumulation
The new code keeps the pattern trustees know from the old law: income applied to the objects is not taxed, and the audit report in Form No. 112 reports a 15% deemed accumulation. Where income is left unspent beyond that, two routes are available, and they are not interchangeable.
| Situation | Provision | Form | Old form |
|---|---|---|---|
| Income not received, or received too late in the year to spend | Section 341(7) | Form No. 108 | Form 9A |
| Income deliberately set apart for a stated purpose | Section 342(1) | Form No. 109 | Form 10 |
Both must be furnished on or before the due date for the return under section 263(1). Filing the return late does not extend that date. A trust that had the money and simply did not spend it, without accumulating it for a stated purpose, has neither route.
Voluntary contributions
- Corpus donations are dealt with separately, under section 339.
- Other voluntary contributions form part of the income to be applied.
- Anonymous donations beyond ₹1,00,000 or 5% of donations, whichever is higher, are taxable at 30% under section 337.
80G approval for donors
A registered trust can also apply for approval under section 354, in the same Form No. 104 or 105. A donor to an approved trust is eligible for a deduction of 50% of the donation, subject to 10% of adjusted gross total income, under section 133(2). The trust must file Form No. 113 and issue Form No. 114 to each donor by 31 May.
Audit report and ITR-7
The audit report under section 348 is furnished in Form No. 112, one month before the due date for the return. The return is filed in ITR-7 afterwards, with nothing attached.
How TaxClue helps
TaxClue's CA team handles NPO registration (12A) and 80G approval, accumulation filings, the audit report and ITR-7 for charitable trusts. Contact us to review your trust's compliance under the new Act.
This is an explanatory guide, not tax advice, and it does not reproduce the sections in full. Read the bare text before you rely on it, and check for later amendments, the Income-tax Rules, 2026 and CBDT circulars and notifications.