Income Tax for NGO — Section 11, 12AB Registration & 80G (FY 2026-27)

Updated: 3 June 2026  |  Income-tax Act, 2025  |  Sections 11, 12, 12AB, 80G

Section 11 — Exemption for NGO Income

Section 11 of the Income-tax Act, 2025 grants exemption on income derived from property held under a trust for charitable or religious purposes, to the extent such income is applied (or accumulated for application) in India for such purposes. The exemption is available only when the trust has a valid Section 12AB registration.

The key conditions under Section 11 are:

• At least 85% of income must be applied towards the stated objects in the same financial year
• The remaining up to 15% may be accumulated or set apart — no prior approval needed for this
• Income must be applied in India (foreign remittance subject to approval under FCRA)
• The trust must not violate conditions under Section 13 (no benefit to specified persons)
• Accounts must be audited if income exceeds ₹5,00,000 (Form 10B)

Section 12A / 12AB Registration — What Changed

Accumulation Beyond 15% — Section 11(2)

If an NGO is unable to apply its income (the 85%) during the current financial year, it can accumulate the income for future application under Section 11(2) — but only for a specific purpose and for a maximum of 5 years. The NGO must:

• File Form 9A electronically before the due date of ITR filing
• Specify the purpose for which income is being accumulated
• Ensure the accumulated amount is invested in government securities, bank FDs, or other notified instruments
• Actually apply the accumulated amount within 5 years

Section 80G — Deduction for Donors to NGOs

When an NGO obtains Section 80G approval from the Income Tax Department, donors (individuals, companies, partnerships) can claim a deduction from their taxable income for donations made to the NGO. Key points:

• 50% deduction — donations to most approved NGOs qualify for 50% deduction (subject to 10% of adjusted gross total income cap)
• 100% deduction without limit — for donations to Prime Minister's Relief Fund, National Defence Fund, and select others
• 100% deduction with 10% cap — for some approved institutions like universities with 80G(2)(a) status
• Donors must obtain a receipt with the NGO's PAN, 80G registration number, and the amount donated
• Cash donations exceeding ₹2,000 do not qualify for 80G deduction — must use banking channels
• 80G is available under the old tax regime only; not available under Section 115BAC (new regime)

Form 10B — Mandatory Audit for NGOs

Under Section 12A(b) of the Income-tax Act, 2025, an NGO whose total income before applying the Section 11 exemption exceeds ₹5,00,000 must get its accounts audited by a Chartered Accountant. The auditor must submit the audit report in:

• Form 10B — for charitable trusts and NGOs not covered by 10(23C)
• Form 10BB — for educational institutions, hospitals, etc. registered under Section 10(23C)

The audit report must be submitted before the due date of ITR filing (usually October 31 for audited entities). Late filing attracts a penalty and can result in withdrawal of exemption.

Activities That Forfeit Exemption — Section 13

How to Get 12AB Registration — Step by Step

Which ITR Form Should an NGO File?

NGOs registered as trusts or societies file ITR-7 — the form for persons including companies required to furnish return under Sections 139(4A), 139(4B), 139(4C), or 139(4D). Section 8 companies also file ITR-7. The due date for ITR-7 (with audit) is generally October 31 of the assessment year.

Frequently Asked Questions — Income Tax for NGO

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