The decision to give 100 percent income tax exemption on all the donations to the Kashi Vishwanath temple was taken by the state cabinet on Tuesday.

Income tax exemption on donations received by the Trust so far was 50 percent.

A decision to this effect has been taken by the Akhilesh Yadav government, which also gave its assent to a proposal to allow the Kashi Vishwanath Trust to use the funds it received in building hospitals and schools.

An official spokesman of the state government said on Wednesday that the state cabinet had granted approval for the Trust to use charitable funds received to set up dharmshalas (rest houses), hospitals and dispensaries that offer free treatment.

After the state cabinet approved the Shri Kashi Vishwanath Temple Trust (Amendment) 2013, the trust would function on the lines of the Tirupati Balaji Trust in Andhra Pradesh, the official said.

Speaking of full income tax exemption to donations to the Trust, an official said: "While this will help the Trust get more funds, it will also enable expansion of the Trust's activities in the field of medicare, health, education and research," an official said.

The income tax department had recently okayed the proposal of tax exemption on donations under the 80 GGA clause.