TL;DR India’s charitable sector, with nearly 4.3 Lakh registered institutions since 2018-19, enjoys income tax exemptions in exchange for delivering public goods the state cannot fully provide. Five states host over half of all registered entities, with Maharashtra alone accounting for nearly one in six. The Finance Act 2020 triggered a registration overhaul that nearly halved re-registration timelines and created a compliance surge. Yet tax liability has doubled over a decade, even as total exemptions claimed grew 60%. The system is simultaneously expanding and tightening; more institutions, more money exempt, but more scrutiny, more liability. Whether that signals health or stress remains an open question.

Context

The Indian state has always had to deliver more than capacity. Tax exemptions for charitable institutions are, at their core, a pragmatic response to that gap, a mechanism through which the government conscripts private organisations into delivering public goods it cannot adequately provide itself. While it is often discussed in the language of generosity, that framing, while not wrong, is incomplete. A more precise account would note that India’s Income Tax Act, 1961 creates a conditional fiscal arrangement: organisations that pursue specified charitable purposes  such as education, healthcare, poverty relief, religion and meet compliance requirements are exempted from income tax on their receipts. This is a bet that the social value generated by these organisations exceeds the tax revenue foregone. In theory, this is efficient. In practice, it is a system that requires vigilance. It is a question of whether the state’s concession is actually purchasing the social outcomes it is meant to.

In this article, we shall look at the data on the institutions claiming tax exemptions.

Who compiles this data?
The data on the institutions that are exempted from Income Tax under various Sections of the Income Tax Act, 1961, is compiled by the Income Tax Department, under the Ministry of Finance.

Where can I download clean & structured data related to Tax Exemption to Institutions?

Clean, standardised, structured, and ready-to-use dataset on the state-wise list of institutions that are provided exemptions under the Income Tax Act, 1961, is available on Dataful.

Key Insights

What counts as "Charitable"? India's Legal Definition and it’s Contested Edges

Before any institution can claim a tax exemption, it must pass a threshold question: is its purpose “charitable” as defined by Indian law? The answer is more complex than it sounds, and the definition has been amended multiple times over the past two decades. Further, it must be underscored that the phrases “Charitable” and “Not for profit” are not identical. The medical/educational institutions existing solely for philanthropic purposes and not for the purposes of profit are covered under Sections 10(23C).

Section 2(15) of the Income Tax Act, 1961 defines “charitable purpose” inclusively to cover:

Religious Purposes: A Separate Stream

Religious trusts such as temples, mosques, churches, gurudwaras, and their associated endowments are also eligible for exemption under Sections 11 and 12, provided they are established for religious purposes and their income is applied accordingly. There is no requirement that a trust serve only one purpose; a trust can be both charitable and religious. However, anonymous donations to religious trusts are fully exempt, while anonymous donations to non-religious trusts are taxed at 30% under Section 115BBC.

The Legal Architecture of the Exemptions: Which sections apply to whom

The Income Tax Act does not have a single exemption provision for charitable organisations. There are two parallel tracks, which the Finance Act 2024 has intended to merge, but which continue to operate separately for many institutions. The Finance Act 2024 (No. 2) introduced Section 12AC to allow trusts under Section 10(23C) to merge into the Section 12A regime without triggering exit tax (Chapter XII-EB). Provisional approvals under Section 10(23C) issued before 01 October 2024 automatically convert to 12AB registrations if a conversion application is filed. This is the most significant structural change to the charitable exemption architecture since the 2020 overhaul.

Five states account for more than half of the institutional registrations

Between assessment years of 2018-19 and 2026-27, the income tax department processed registrations for 4,32,310 charitable and religious institutions seeking tax exemptions. Prior to the Finance Act 2020, charitable organizations in India enjoyed perpetual registration under Section 12AA once approved, with minimal periodic oversight. The Finance Act 2020 introduced Section 12AB, mandating all existing trusts and institutions to re-register within specified timelines, with registrations now valid for only five years. The registration peak came in the 2022-23 assessment year, which alone accounts for 2,09,185 institutions, almost 48.4% of the total.

The distribution of charitable institutions across India reveals stark geographic inequalities. It is to be noted that there can be multi-state trusts or institutions that operate in multiple states. Hence, the totals of unique institutions may not exactly match the state totals. Maharashtra leads with 73942 registered institutions (16.8% of the national total). The next tier consists of Tamil Nadu, with 54208 institutions (12.3%), Gujarat with 46682 institutions (10.6%), Uttar Pradesh with 40292 institutions (9.1%), and Karnataka with 32759 institutions (7.4 %). These five states together host 2,47,883 institutions, 56.3% of the national total. Add Delhi (31208), Rajasthan (24202), West Bengal (22961), Andhra Pradesh (14878), and Kerala (14584), and the top ten states account for 3,55,716 institutions, 80% of all registered entities.

The Tax Liability Paradox: Rising despite Exemptions

While the charitable sector operates under an exemption regime, a significant portion of registered institutions end up showing tax liability. Data on entities filing Form ITR-7—the return form for trusts and institutions claiming exemptions under Sections 11 and 12, reveals a striking pattern: tax liability has surged dramatically in recent years.

Between the 2016-17 and 2025-26 assessment years, total tax liability for these organizations has nearly doubled, from ₹544 crores to ₹1,041 crores (as of 31 January 2026). More significantly, the trajectory shows a dramatic increase after the Finance Act 2020 reforms took effect.

The doubling of tax liability in India’s charitable sector demands a serious study of its own. Is it evidence of regulatory overreach or the evidence of improved enforcement. Both may be right, and that is precisely the problem. Further, as per the Receipt Budgets forming part of the Annual Budget of the Government of India, the total amount of exemption applied by the Charitable Trusts/Institutions has increased from Rs. 7.06 Lakh Crore in 2020-21 to Rs. 11.4 Lakh Crore in 2023-24, a growth of almost 60%.

Sectoral Preferences: Under which sections registrations happen

The exemptions for institutions can be from different sections, such as the organisation itself can be claiming exemption under different sections, while donors to that organisation or trust can also claim deductions, but those are also listed under the exempted institutions. The data suggests that between Assessment Years 2018-19 and 2026-27, a total of almost 1.7 lakh institutions were exempted under only one section, while the rest had multiple sections for which exemptions were claimed.

Further, an analysis of 440,496 institutional registrations reveals that 61.82% of charitable institutions register under multiple sections of the Income Tax Act, with the 12A(1) + 80G(1) combination dominating at 59.51% nationwide. This dual registration strategy—securing both organisational tax exemption and donor deduction benefits- has become the standard approach post-Finance Act 2020 reforms.

Across states, Maharashtra has the 67% of institutions claiming under multiple sections, as compared to Kerala, where over 71% of the institutions claim under a single section. Kerala has the highest single-section rate at 71.5%, where 63.5% of institutions register only under Section 12A, and only 25.5% pursue the dual 12A+80G strategy. This suggests Kerala’s charitable sector relies less on donor-dependent fundraising models.
Further, Bihar, West Bengal, Delhi, and Uttar Pradesh have over 70% multiple sections under which institutions claim tax exemption status.

There is a Post-2020 Transformation that can be seen. Before Reforms (2019-2021), Single-section registrations dominated (88-100%), and most institutions had only Section 12A registration. Assessment year 2022-23 saw 214,997 institutions, and Multiple-section registrations jumped to 58.8%, in which the dual 12A+80G strategy emerged as dominant (55.3%), which jumped to 76% by AY 2026-27, and multiple-section exempt institutions jumped to 77%.

Some observations from the CAG performance Audit report in 2022

The CAG analysed the data of the 6,89,011 cases provided for AY 2014-15 to AY 2017-18. Maharashtra had the highest number of Trusts/Institutions claiming exemptions from AY 2014-15 to AY 2017-18 at 16.7% of total cases followed by Gujarat at 14.2% and Tamil Nadu at 10.8%. It is further held that 47.2% cases of 5,693 audited sample were engaged in educational activities against which 35.1% of total exemptions was granted, followed by 28.1% engaged in other activities such as General public utility, Preservation of Environment, Preservation of Monuments, Yoga,; and entities with more than one activity.

Why does it matter?
India’s charitable exemption framework is not a niche tax provision. It is the legal infrastructure underpinning hospitals, schools, temples, NGOs, and welfare organisations that collectively serve hundreds of millions of people, particularly those the market ignores and the state underserves. When this system functions well, it efficiently channels private resources toward public goods. When it malfunctions, either through regulatory complexity, geographic concentration, or compliance failure, the costs fall hardest on the most vulnerable populations and the smallest organisations.

Key Numbers (2018-19 to 2026-27 cumulative)

• Total: 4,32,310 registered charitable and religious institutions nationally

• The top-5 states: Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka, account for 56.2% of all institutions. When the top-10 is considered, it adds up to 80%.

• The 12A+80G Dual Strategy is Now Standard: What was once the exception (pre-2020) is now the norm, with 76% of recent exemptions pursuing this combination.