What is the Direct Tax Code 2025 and when did it come into effect?

The Direct Tax Code 2025 (Income Tax Act 2025) replaced the Income Tax Act 1961 from April 1, 2026. It simplifies the entire direct tax framework, renumbers sections, removes redundancies, and modernizes taxation for India.

Is the Income Tax Act 1961 still valid after April 2026?

The Income Tax Act 1961 was repealed under Section 536 of the new Act from April 1, 2026. However, all assessments, appeals, and proceedings for periods before April 1, 2026 continue under the old ITA 1961 rules.

What is the new section number for Section 80C in Income Tax Act 2025?

Section 80C of the ITA 1961 maps to Section 123 of the Direct Tax Code 2025. Deductions for LIC premiums, PPF, ELSS, EPF, and home loan principal repayment continue under the new act.

What is the new section for TDS on professional fees (194J)?

Section 194J (TDS on professional and technical services) of the old Income Tax Act 1961 has been renumbered in the Direct Tax Code 2025. Use our free converter at ita1961to2025.in to find the exact new section number instantly.

How do I convert old income tax section numbers to new 2025 numbers?

Visit ita1961to2025.in and use the free section search tool. Type any old ITA 1961 section number (e.g., 80C, 194J, 139) and instantly see the new DTC 2025 equivalent, its status, and key changes.

Is the ITA 1961 to 2025 mapping tool free for CAs and tax professionals?

Yes, completely free. The section mapper, comparison cheat sheet, PDF download, and Tax Academy blog are all free for Chartered Accountants, tax lawyers, law students, and taxpayers.

Which sections were completely deleted in the new Income Tax Act 2025?

Several redundant and overlapping sections from ITA 1961 were not carried into DTC 2025. Use our free converter — each section is marked as Retained, Modified, or Deleted so you can quickly check any section's status.

Can I download the ITA 1961 to DTC 2025 comparison as a PDF?

Yes! Visit the Comparison page at ita1961to2025.in/comparison to download a free cheat sheet PDF showing side-by-side mapping of key ITA 1961 sections to their DTC 2025 equivalents.

Is the Direct Tax Code 2025 replacing the Income Tax Act 1961 for donations?

No. The Direct Tax Code (DTC) 2025 is not yet law. All tax deductions for charitable donations in 2026 will be governed by Section 80G of the existing Income Tax Act, 1961.

What is the most important document needed to claim an 80G deduction now?

A simple receipt is not enough. You must obtain Form 10BE (Certificate of Donation) from the charitable institution. The institution can only issue this after they file a statement of your donation in Form 10BD with the tax department.

Can I claim a deduction for a cash donation of ₹5,000 under Section 80G?

No. Cash donations exceeding ₹2,000 are not eligible for a tax deduction under Section 80G. To claim the benefit, any donation above this limit must be made through banking channels like cheque, demand draft, or digital payment.

Section 80G Donations in 2026: New Rules & Is DTC 2025 a Myth?

Key Takeaways

Income Tax Act, 1961 Remains in Force: The long-discussed Direct Tax Code (DTC) has not replaced the existing tax laws. All deductions for charitable donations for the financial year 2025-26 (Assessment Year 2026-27) will be governed by Section 80G of the Income Tax Act, 1961.
Digital Verification is Mandatory: A simple donation receipt is no longer sufficient. To claim a deduction under Section 80G, the donor must obtain a Certificate of Donation in Form 10BE from the recipient institution. This is non-negotiable.
New Compliance Burden on Institutions: The onus is on the charitable institution to file a Statement of Donations in Form 10BD with the Income Tax Department by May 31st following the financial year of donation. Only after this filing can they issue the mandatory Form 10BE to donors.
Deduction in New Tax Regime Not Allowed: The benefit of a deduction under Section 80G is available only to taxpayers who opt for the Old Tax Regime. It is not available under the New Tax Regime.

PART 1: EXECUTIVE SUMMARY

This guide provides a definitive overview of the compliance framework for charitable donations under Section 80G of the Income Tax Act, 1961. Recent amendments have fundamentally altered the process for claiming tax benefits, shifting from a paper-based receipt system to a digitally verified trail. Our analysis clarifies the current legal standpoint, dismissing the prevailing misconception about a "Direct Tax Code 2025" and focusing on the law as it stands for the upcoming financial years.

The Prevailing Law (Income Tax Act, 1961): Section 80G has historically allowed taxpayers to claim deductions for donations made to eligible charitable institutions and funds. The process was primarily dependent on a physical receipt issued by the donee. This framework, while principled, lacked robust verification, leading to potential discrepancies.
The Current Law (Post-Amendment): The Finance Act, 2021, introduced a critical change, making the process transparent and data-driven. Now, for a donor to claim a deduction, the recipient institution must first report the donation to the Income Tax Department via Form 10BD. Subsequently, the institution must issue a certificate (Form 10BE) to the donor. The deduction is then cross-verified with the donor's Annual Information Statement (AIS). Failure in this process leads to the denial of the deduction.
Who is Impacted: This change affects all taxpayers who make charitable donations and wish to claim a tax deduction, including individuals, companies, firms, and HUFs. It places a significant compliance responsibility on all charitable trusts, NGOs, and institutions registered under Section 80G to ensure timely and accurate reporting of all donations received.

PART 2: DETAILED TAX ANALYSIS

1. Introduction to the Deduction under Section 80G

Section 80G of the Income Tax Act, 1961, is a key provision designed to encourage philanthropic activity by offering tax incentives to donors. It allows taxpayers to reduce their gross total income by the amount of their donation, subject to specific conditions and limits. The core objective is to promote contributions to notified funds and charitable organizations engaged in social, religious, or cultural welfare, thereby fostering a culture of giving and supporting nation-building activities.

The deduction is available to all classes of taxpayers, but it is crucial to note that it can only be claimed when filing under the Old Tax Regime. Taxpayers opting for the simplified New Tax Regime are not eligible for this benefit.

2. 1961 Act Status vs. The Direct Tax Code 2025 Myth

There is significant misinformation regarding the implementation of a new Direct Tax Code (DTC) in 2025. While multiple drafts and proposals for a DTC have been discussed over the years to simplify the law, the Income Tax Act, 1961 remains the definitive and governing direct tax legislation in India. No Direct Tax Code has been passed by Parliament or enacted.

Therefore, the rules for claiming deductions for charitable donations in 2026 (for Financial Year 2025-26) are dictated solely by Section 80G of the 1961 Act, as amended by subsequent Finance Acts.

Donation Categories under Section 80G:

Donations are broadly classified into four categories which determine the quantum of the deduction available:

Category	Deduction Amount	Qualifying Limit	Examples
Category A	100% of Donated Amount	No Limit	National Defence Fund, Prime Minister's National Relief Fund, National Children's Fund.
Category B	50% of Donated Amount	No Limit	Prime Minister's Drought Relief Fund, Jawaharlal Nehru Memorial Fund, Rajiv Gandhi Foundation.
Category C	100% of Donated Amount	Subject to 10% of Adjusted Gross Total Income	Donations to the government or any approved local authority for promoting family planning.
Category D	50% of Donated Amount	Subject to 10% of Adjusted Gross Total Income	Most donations to registered NGOs, charitable trusts, religious institutions, etc.

Understanding the Qualifying Limit: For donations falling under Categories C and D, the total deduction cannot exceed 10% of the Adjusted Gross Total Income (AGTI).

Adjusted Gross Total Income is calculated as:
- Gross Total Income (sum of all income heads)
- Less: Long-Term Capital Gains
- Less: Short-Term Capital Gains (under Section 111A)
- Less: All other deductions under Chapter VI-A (except Section 80G)

3. Impact on Personal Finance & Investments

The stringent new compliance rules for Section 80G demand a proactive approach from taxpayers.

Strategic Giving: Taxpayers should verify the eligibility of an institution before donating. This includes confirming if the institution has a valid Section 80G registration and if it is compliant with the Form 10BD/10BE filing requirements.
Documentation is Key: Beyond making a donation, the donor must ensure their correct Name, Address, and PAN are provided to the institution. Any error in these details in Form 10BD will lead to a mismatch and potential disallowance of the claim.
Mode of Donation: To maintain a clear audit trail and ensure eligibility, donations should be made through banking channels. Cash donations above ₹2,000 are not eligible for deduction under Section 80G. Donations in kind (e.g., food, clothes) are also not eligible for this deduction.
Financial Planning: For high-income individuals planning substantial donations, calculating the 10% AGTI limit in advance is essential. This helps in optimizing the tax benefit and avoiding a situation where the donation amount exceeds the deductible limit.

4. Proof Submission & ITR Filing Steps

The process of claiming the deduction has shifted from manual to automated verification. Following these steps is mandatory.

Step 1: Making the Donation

Donate to an eligible institution via any mode other than cash (if the amount exceeds ₹2,000).
Provide accurate PAN and contact details to the donee institution.
Collect a preliminary receipt from the institution for your records.

Step 2: Compliance by the Donee Institution (Crucial)

The receiving institution is legally obligated to file a statement of all donations received during the financial year in Form 10BD.
The due date for filing Form 10BD is May 31st of the financial year immediately following the financial year in which the donation is received.

Step 3: Issuance of Donation Certificate

After successfully uploading Form 10BD, the institution must download the Certificate of Donation in Form 10BE from the income tax portal and provide it to the donor.
This certificate contains a unique Donation Reference Number (ARN) which serves as the official proof.

Step 4: ITR Filing by the Donor

The details of your donation, as filed by the institution in Form 10BD, will automatically reflect in your Form 26AS and Annual Information Statement (AIS).
While filing your Income Tax Return, you must fill 'Schedule 80G'.
In Schedule 80G, you will be required to provide details of the donation, including the PAN of the donee, the amount, and the Donation Reference Number from Form 10BE.
The ITR utility will cross-verify these details with the information available in your AIS. A mismatch will result in the claim being disallowed. Without Form 10BE, a claim for deduction is not valid.

5. Conclusion

The tax benefits for charitable donations under Section 80G remain robust, but the pathway to claiming them has been formalized and digitized. The era of relying on simple payment receipts is over. The current framework, centered on the mandatory filing of Forms 10BD and 10BE, ensures unparalleled transparency and holds both the donor and the donee accountable. Taxpayers must exercise due diligence by ensuring the recipient organization is compliant with these new regulations. For the foreseeable future, including the 2026 tax season, all compliance must align with the provisions of the Income Tax Act, 1961, as the Direct Tax Code remains a proposal, not a reality.

💡 Deduction Tip: Carefully review which Section 80 deductions have survived the transition to the Direct Tax Code 2025.