Scientific Research Approval: Section 45 of the Income-tax Act, 2025 and Earlier Section 35(1)(ii)/(iii)

Scientific research associations, universities, colleges and other eligible institutions can receive tax-deductible research contributions only when the statutory conditions applicable to the recipient and donor are satisfied. From 1 April 2026, the current framework is principally contained in Section 45 of the Income-tax Act, 2025 and the Income-tax Rules, 2026.

What Is the Purpose of Scientific Research Approval?

The approval mechanism identifies qualifying research organisations to which eligible payments for scientific research, social science research or statistical research may qualify for deduction under the applicable income-tax provision. Approval also subjects the recipient institution to continuing conditions relating to genuine research activity, accounts, audit, utilisation of funds and annual reporting.

Section 45 of the Income-tax Act, 2025

For Tax Year 2026-27 onward, Section 45 contains the principal deduction framework for scientific research. Section 45(3)(a) covers payments to specified research associations, universities, colleges and other institutions for scientific research and for social science or statistical research, subject to statutory approval and other conditions.

Approval of a qualifying research association, university, college or other institution is dealt with under Section 45(4)(b). The prescribed application and compliance requirements are contained in the Income-tax Rules, 2026.

Who Can Seek Approval?

Depending on the category and research purpose, approval may be sought by an eligible:

• research association;
• university;
• college; or
• other institution.

The relevant research must fall within the statutory scientific-research, social-science-research or statistical-research categories.

Form No. 17: Application for Approval

Form No. 17 is the prescribed application for a research association, university, college or other institution seeking approval under Section 45(4)(b). The application is submitted to the jurisdictional Commissioner of Income-tax through the e-Filing portal in accordance with the applicable rules.

The Income Tax Department's current Form 17 user guidance states that the form is generally filed during the tax year immediately preceding the tax year for which approval is sought. Institutions should therefore check the applicable filing window on the portal before submission, particularly in first-year or transitional cases.

Conditions for Approval under the Income-tax Rules, 2026

Research associations

A research association seeking approval must satisfy the prescribed requirements applicable to its category. These include maintaining a genuine research focus, carrying on the relevant research activity, maintaining proper books, obtaining the prescribed audit and keeping records that show the receipt and utilisation of research contributions.

The institution should also be able to substantiate its research programme through supporting material such as research reports, publications, patents or similar outputs, project records and proposed research plans and budgets, where required by the Rules and the approval process.

Universities, colleges and other institutions

Universities, colleges and other eligible institutions must ensure that amounts received for approved research are used for the relevant research purpose. Separate accounting and supporting records should clearly identify the research receipts and expenditure, and the research should be carried out through the institution in the manner required by the Rules.

Where the institution has education, training, consultancy, administration, commercial or charitable activities in addition to research, its accounting system should clearly segregate the approved research funds and their utilisation.

Form 15 and Form 16: Annual Donation Reporting

The Income-tax Act, 2025 introduces a specific annual reporting and certification system for eligible scientific-research contributions.

Form No. 15

Form 15 is the annual statement furnished by the prescribed research institution in respect of eligible sums received during the tax year under Section 45. It applies specifically to the scientific-research contribution framework and is not the general charitable-donation statement used for ordinary charitable donations.

Form No. 16

Form 16 is the annual donor certificate for eligible scientific-research contributions. It certifies the aggregate qualifying sum received from the donor during the relevant tax year and supports verification of the donor's deduction claim.

Under the current rules and official guidance, Form 15 and Form 16 are required by 31 May immediately following the relevant tax year. Issuance of Form 16 does not by itself create a deduction; the donor must independently satisfy the statutory conditions applicable to the claim.

Is the Deduction Still 125%?

No. The historical weighted-deduction percentages should not be used for current claims. Under the Income-tax Act, 1961, the deduction for contributions covered by Sections 35(1)(ii) and 35(1)(iii) had already been reduced to 100% of the eligible amount from Assessment Year 2021-22. The Income-tax Act, 2025 does not revive the old 125% weighted-deduction description for the current Section 45 regime.

For example, a qualifying payment of ₹10 lakh is not automatically treated as ₹12.50 lakh merely because an older article referred to a 125% deduction. The deduction must be determined under the law applicable to the relevant tax year and taxpayer.

Can Approval Be Withdrawn?

Yes. Approval is a continuing statutory status, not an unconditional permanent certificate. Failure to carry on genuine research activity or comply with the conditions of approval can lead to adverse action, including withdrawal of approval in accordance with the applicable Act and Rules.

Before adverse approval action is taken, the statutory procedure and opportunity of hearing applicable to the case must be followed.

Approval and Exemption of the Institution's Own Income Are Distinct

Approval for the purpose of enabling eligible research contributions and exemption of the institution's own income are related but distinct tax issues. Under the earlier Income-tax Act, 1961, Section 10(21) dealt with exemption for qualifying approved research associations. Under the Income-tax Act, 2025, the corresponding exemption framework is contained in Schedule III, subject to the applicable statutory conditions.

Earlier Law: Sections 35(1)(ii) and 35(1)(iii) of the Income-tax Act, 1961

For assessment years governed by the Income-tax Act, 1961:

• Section 35(1)(ii) covered eligible payments to approved research associations, universities, colleges or other institutions for scientific research.
• Section 35(1)(iii) covered eligible payments for research in social science or statistical research.
• Form 3CF was used in the earlier approval framework.

These provisions remain relevant for assessments, appeals and other proceedings concerning earlier years, but they should not be presented as the current application procedure for Tax Year 2026-27 onward.

Old and New Law at a Glance

Checklist Before Applying for Approval

• Constitutional documents clearly support the relevant research activity.
• The institution falls within an eligible statutory category.
• Genuine scientific, social science or statistical research can be demonstrated.
• Books of account and supporting documents are properly maintained.
• Separate records identify research contributions and their utilisation where required.
• Research expenditure is supported by invoices, vouchers and other evidence.
• Audit requirements can be complied with.
• Research reports, publications, patents and project records are maintained where relevant.
• Future research projects and budgets are documented.
• Donor-wise records of eligible contributions are maintained.
• Systems are in place for Form 15 filing and Form 16 issuance.
• The Form 17 filing window is checked before submission.
• Other income-tax return and reporting obligations are up to date.

Official Income Tax Department Resources

Conclusion

The current scientific-research approval regime is materially different from the historical Section 35 framework. From 1 April 2026, eligible research associations, universities, colleges and other institutions should primarily examine Section 45 of the Income-tax Act, 2025, the Income-tax Rules, 2026, Form 17 for approval, Form 15 for annual reporting of eligible research contributions and Form 16 for donor certification.

Institutions should treat approval as an ongoing compliance responsibility covering genuine research activity, proper accounts, audit, utilisation of funds, annual reporting and adherence to the conditions stated in the approval.

Disclaimer: This page provides general tax information. Eligibility for approval or deduction depends on the facts, the category of institution, the nature of research, the tax year and compliance with the applicable statutory conditions.