TL;DR: India’s Income Tax Department maintains records of institutions exempted from income tax under various provisions of the Income Tax Act, 1961. Between assessment year (AY) 2020-21 and AY 2026-27, 7.51 lakh approvals were given under various sections, with Sections 12A and 80G accounting for 96.6% of them. The distribution is also geographically concentrated, with the top 10 states accounting for 80.8% of the approvals and Maharashtra alone accounting for 17.4%. The assessment-year data shows a large concentration in AY 2022-23, which accounts for 46.8% of all approvals during the period.

Context

Tax exemptions for institutions under the Income Tax Act, 1961 provide a framework through which qualifying organisations can receive exemptions under different provisions of the law. The data covers institutions exempted under provisions including Sections 12A, 80G, 10(23C), 35(1), 332(3), and 354(2). These provisions serve different purposes, allowing the distribution of institutions to be examined across sections, assessment years, and states.

For example, Sections 12A and 80G together account for the overwhelming majority of exempt institutions. Looking at the numbers by assessment year and state also shows that the distribution is far from uniform.

Who Compiles This Data?
The data on institutions exempted from income tax under various sections of the Income Tax Act, 1961 is compiled by the Income Tax Department, Ministry of Finance.

Where can I download Clean & Structured Data on the Exempted Institutions under Income Tax?

Clean, standardised and structured data on the state-wise list of institutions exempted from income tax under various sections of the Income Tax Act, 1961, is available through Dataful.

Key Insights

2022-23 Saw a Spike in Exemption Approvals

The number of exemption approvals was 19,994 in AY 2020-21 and reduced to 4,623 in AY 2021-22. It then rose sharply to 3,51,586 in AY 2022-23, accounting for 46.8% of all approvals between AY 2020-21 and AY 2026-27. The AY 2022-23 figure was nearly 76 times the number recorded in the previous year. This may be due to a large number of organisations extending COVID-19 relief work, and also the changes in the registration framework.

As mentioned earlier, this increase coincides with changes to the registration framework for charitable and religious trusts. The Finance Act 2020 introduced the Section 12AB framework and required existing registrations under the earlier provisions to undergo fresh registration, with the compliance timelines subsequently extended.

The number of approvals subsequently declined to 1,12,272 in AY 2023-24, 83,083 in AY 2024-25 and 79,462 in AY 2025-26, before increasing to 99,915 in AY 2026-27.

Most Exemptions under Sections 12A and 80G

The exemptions are heavily concentrated in two sections. Section 12A accounts for 4.20 lakh approvals, or 55.9%, while Section 80G accounts for 3.06 lakh approvals, or 40.7%. This is understandable as these are the common enabling sections for non-profits and other organisations to get exemption status.

Section 12A: Provides the framework for tax exemption for eligible charitable or religious trusts and institutions, subject to prescribed conditions.

Section 80G: Allows eligible donations to specified funds, charitable institutions and other approved entities to qualify for a tax deduction for the donor.

Together, these two sections account for 7.25 lakh approvals, or 96.6% of the total.

The remaining sections form only a small share:

• Section 332(3): 10,685 approvals

• Section 354(2): 9,945 approvals

• Section 10(23C): 5,040 approvals

• Section 35(1): 236 approvals

Section 10(23C): Provides tax exemption for specified funds and institutions, including certain educational and medical institutions, subject to prescribed conditions.

Section 35(1): Provides tax-related benefits for specified expenditure connected with scientific research and related activities.

Sections 332(3) and 354(2): These provisions cover provisional registration or approval for institutions whose activities have not commenced.

Thus, roughly 97 out of every 100 exemption approvals were either under Section 12A or Section 80G.

Maharashtra is home to organisations with most Exemption Approvals

The geographic distribution is similarly concentrated. Maharashtra accounts for 17.4% of the approvals, the highest share among all states. Tamil Nadu follows with 11.3%, while Gujarat and Uttar Pradesh account for 10.1% and 10.0%, respectively. Delhi and Karnataka contribute another 7.5% and 7.3%.

The top 10 states together account for 80.8% of all approvals in the selected period. In other words, roughly 8 out of every 10 approvals are for organisations from these 10 states. Maharashtra’s 17.4% share is substantially higher than Tamil Nadu’s 11.3%, the second-highest share.

Why Does It Matter?

The figures show that exemption approvals under the Income Tax Act are concentrated across assessment years, sections, and states. Nearly half the approvals between AY 2020-21 and AY 2026-27 were in AY 2022-23, while Sections 12A and 80G together account for 96.6% of these approvals. The sharp increase in AY 2022-23 coincides with changes to the registration framework introduced by the Finance Act 2020, which required existing trusts and institutions to undergo fresh registration under the new framework. However, the data alone cannot establish how much of the increase was directly due to these changes.

The geographic distribution is also concentrated, with the top 10 states accounting for 80.8% of all approvals and Maharashtra alone accounting for 17.4%.

Key Numbers (from AY 2020-21 to AY 2026-27)

• Exemption Approvals
   2020-21: 19,994 → 2022-23: 3.52 lakh → 2026-27: 99,915

• Exemption Approvals in AY 2022-23
  3.52 lakh, accounting for 46.8% of all approvals during the period

• Section-wise Distribution of Approvals
  Section 12A: 55.9%, Section 80G: 40.7%, Others: 3.5% (Sections 10(23C), 332(3), 354(2), and 35(1))

• Top 10 States in terms of Approvals
  Maharashtra (17.4%), Tamil Nadu (11.3%), Gujarat (10.1%), Uttar Pradesh (10.0%), Delhi (7.5%), Karnataka (7.3%), Rajasthan (5.6%), West Bengal (5.5%), Andhra Pradesh (3.3%), and Telangana (2.9%)

• Top 10 States’ Share in Approvals
  80.8% of all exemption approvals