CBDT Approves IIIT Dharwad Scientific Research Section 45 2026

What Happened?

The Central Board of Direct Taxes (CBDT) has recently approved the Indian Institute of Information Technology (IIIT) Dharwad for scientific research activities under Section 45 of the Income-tax Act, 2025. This approval is subject to strict compliance with Rules 31, 32, and 34 as prescribed under the new Income Tax Act 2025. The notification was issued in July 2026 and becomes effective for Assessment Year 2026-27 onwards.

This approval means IIIT Dharwad now qualifies as an approved institution for scientific research, opening doors for tax benefits related to donations, deductions, and research funding.

Background & Legal Context

What is Section 45 of Income-tax Act 2025?

Section 45 of the Income-tax Act, 2025 deals with exemptions and special provisions for institutions engaged in scientific research and development. This section allows individuals and companies to claim tax deductions on donations made to approved research institutions. Under the old Income-tax Act 1961, similar provisions existed, but the 2025 Act has streamlined and strengthened these rules.

The Three Key Rules: 31, 32, and 34

• Rule 31: Specifies the eligibility criteria for institutions to qualify as approved scientific research organizations. The institution must have a defined research agenda, qualified personnel, and demonstrated track record in scientific work.
• Rule 32: Covers the application and approval process. Institutions must submit detailed documentation including financial statements, research projects, infrastructure details, and compliance history with tax authorities.
• Rule 34: Mandates ongoing compliance and reporting requirements. Approved institutions must file annual reports, maintain transparent accounting, conduct research as per approved scope, and submit compliance certificates to CBDT.

Why IIIT Dharwad?

IIIT Dharwad is a premier technical institution focusing on information technology and computer science research. The approval recognizes its contribution to cutting-edge research in technology, artificial intelligence, cybersecurity, and computational science. The institution meets all CBDT standards for scientific research infrastructure and has demonstrated commitment to advancing knowledge and innovation.

What Does This Mean for You?

For Individual Donors:

If you are a resident individual in India with taxable income, donations made to IIIT Dharwad for research now qualify for tax deductions under Section 45 of the IT Act 2025. In Assessment Year 2026-27, you can claim deductions on your income tax return (Form ITR) for contributions to IIIT Dharwad's approved research projects. The deduction is allowed from your gross total income, thereby reducing your overall tax liability.

For example, if you donated ₹1,00,000 to IIIT Dharwad in FY 2025-26 (AY 2026-27), and you fall in the 30% tax bracket, you save ₹30,000 in income tax. Keep proper receipts and donation certificates from IIIT Dharwad mentioning the research project code.

For Companies and Corporate Entities:

Corporate social responsibility (CSR) investments in IIIT Dharwad now have additional tax advantages. Under Section 45 approval, companies can claim deductions on research donations beyond their mandatory 2% CSR spend. This is beneficial for technology companies seeking to support innovation and gain tax efficiency simultaneously.

Companies must ensure that donations are documented properly with IIIT Dharwad and that the institution provides acknowledgment that funds are utilized for approved scientific research.

For IIIT Dharwad:

The approval significantly boosts the institution's ability to attract research funding from individuals, corporations, and international donors. The tax benefit incentivizes donations, which translates to increased research budgets, better infrastructure, and more ambitious research initiatives. However, the institution must now strictly comply with Rules 31, 32, and 34 to maintain this approval status.

For Research Collaborators and Students:

This approval enhances the credibility and funding potential of IIIT Dharwad's research programs. Researchers and students can access better-funded projects, collaborations with industry sponsors (who benefit from tax deductions), and access to advanced research facilities.

What Should You Do Now?

Action Items for Individual Taxpayers:

• Maintain Records: If you plan to donate to IIIT Dharwad, request and keep the donation receipt clearly mentioning the institution's CBDT approval number and the specific research project.
• Document Research Purpose: Ensure the donation receipt specifies that funds are allocated to approved scientific research (not general administration or infrastructure unrelated to research).
• Claim in ITR: In your income tax return for AY 2026-27 onwards, claim the deduction in the relevant schedule. Different schedules may apply depending on your income source (salary, business, or capital gains).
• Report Correctly: Disclose the donation details in your ITR and cross-verify with IIIT Dharwad's records to avoid mismatch notices from the tax department.

Action Items for Companies:

• Review Donation Policy: Update your corporate donation policy to include IIIT Dharwad as a beneficiary institution under Section 45 category.
• Evaluate CSR Strategy: Consider allocating a portion of CSR spend or separate donations to IIIT Dharwad research projects for dual benefits (CSR compliance + tax deduction).
• Document Everything: Maintain detailed records of amount donated, date of donation, project code, IIIT Dharwad's CBDT approval reference, and research objectives.
• Verify Compliance: Before donating substantial amounts, verify IIIT Dharwad's current compliance status with Rules 31, 32, and 34 by checking CBDT's latest notifications.

Action Items for IIIT Dharwad:

• Ensure strict compliance with Rules 31, 32, and 34 to maintain approval status.
• File annual compliance reports and audited financial statements with CBDT on time.
• Use donations only for approved research projects and maintain transparent accounting.
• Issue detailed donation receipts to all donors mentioning CBDT approval.
• Conduct periodic internal audits to ensure funds are used strictly for scientific research.

Key Takeaways

• CBDT Approval Confirmed (July 2026): IIIT Dharwad is now officially approved for scientific research donations under Section 45, IT Act 2025, effective from AY 2026-27.
• Three Compliance Rules Matter: Rules 31 (eligibility), 32 (approval process), and 34 (ongoing compliance) govern this approval. Any breach can lead to withdrawal of approval status.
• Tax Deductions Available: Individuals and companies can now claim income tax deductions on donations to IIIT Dharwad's research projects, providing significant tax savings.
• Documentation is Critical: All donors must obtain proper receipts, keep donation records, and disclose details in income tax returns to substantiate claims during tax assessment.
• Compliance is Ongoing: IIIT Dharwad must file annual reports and maintain transparent financial accounting to retain its approved status. Non-compliance can result in approval withdrawal.

Important Note for Assessment Year 2026-27: If you made donations to IIIT Dharwad in FY 2025-26 (AY 2026-27), ensure you have proper documentation and claim deductions in your ITR filed by 31st July 2026. Keep copies of all communication with IIIT Dharwad regarding the approval notification for reference during any tax department inquiry.

Need expert help with this? EaseValue CAs in Jaipur — WhatsApp 63677 44602