Section 45(3)(a) of the Income Tax Act, 2025 provides a deduction for donations made to research associations, Universities, colleges, or other institutions approved for scientific research. However, the deduction is conditional upon the recipient complying with reporting requirements under Form 15 and Form 16. Understanding these requirements is essential for both donors and recipients.
The Reporting Framework
Rule 31 of the Income Tax Rules, 2026 specifies the reporting requirements for research associations, Universities, colleges, and other institutions receiving donations for scientific research【31†L3-L5】.
Form 15: Statement of Donations
The research association, University, college, or other institution or company referred to in Section 45(3)(a) or (b) shall prepare a statement in Form No. 15 for each tax year and deliver or cause to be delivered to the Director General of Income-tax (Systems) or the person authorised by him【31†L6-L8】.
Form 16: Certificate to Donor
The recipient shall furnish to the donor a certificate specifying the amount of donation in Form No. 16【31†L9-L10】.
Compliance Requirements
Aggregation of Donations
The recipient shall, while aggregating the amounts for determining the sums received for reporting in respect of any person【31†L12-L18】:
- Take into account all the donations of the same nature paid by that person during the tax year
- Proportionately attribute the value of the donation or the aggregated value of all the donations to all the persons, in a case where the donation is recorded in the name of more than one person
- Where no proportion is specified by the donors, attribute equally to all the donors
Verification
The person who is authorised to verify the return of income under section 265 shall verify Form No. 15【31†L20-L21】.
Timeline
Statement of particulars in Form No. 15 and the certificate to the donor in Form No. 16 shall be furnished on or before the 31st May, immediately following the tax year in which the donation is received【31†L23-L24】.
Consequences of Non-Compliance
Disallowance of Deduction
If the recipient fails to comply with the reporting requirements, the donor may not be entitled to claim the deduction. The deduction shall not be allowed unless the recipient has complied with the reporting requirements.
Penalty
Failure to comply with the reporting requirements may attract penalty under the Act.
Practical Considerations
For Donors
Donors should:
- Ensure the recipient is approved under Section 45(4)
- Obtain a certificate in Form No. 16 from the recipient
- Verify that the certificate is issued within the prescribed timeline
- Retain the certificate for records
For Recipients
Recipients should:
- Maintain records of all donations received
- Prepare Form No. 15 accurately and completely
- Issue Form No. 16 to donors within the prescribed timeline
- Ensure proper verification of Form No. 15
- File Form No. 15 with the Director General of Income-tax (Systems) by the due date
Expert Legal Guidance
Understanding the donation-based scientific research deduction and reporting requirements is essential for both donors and recipients. Anuj Desai & Associates provides expert advisory services on Direct Tax Code compliance, helping donors and recipients navigate the deduction and reporting requirements.