Registration of Charitable Trusts

Now Union Budget 2020, Finance Ministry had proposed certain amendments for granting exemptions u/s 12AA, 12AB and donation u/s 80G to trusts and other institutions. However these amendments were postponed due to COVID and other reasons. However notification dated 26.03.2021 of CBDT, Ministry of Finance has notified rules for the implementation of these amendments and the amendments will now be applicable from 01.04.2021.

Proposed amendments:

Registration granted under section 12AA for claiming exemption benefits of section 11 & 12, nature of these registration were perpetual under the existing law. However nothing contained in section 12AA shall apply after 31.03.2021 as per the new amendments.

Hence Section 12AA will cease to exist and the new section 12AB will come into force w.e.f  01.04.2021. The Trusts, societies and institutions including charitable and religious institutions, and NGOs which has existing registration under –

·   Section 12A

·  Section 12AA

·  Section 10(23C)

·  Section 80G

- need to apply for registration under section 12AB by filing form 10A. Validity of registration will as follows –

1.  For 5 years in all the cases

2.  For 3 years in case of Provisional Registration

Time limit for application under new provisions:

* Section 12AB is the new section inserted which is effective from 01.04.2021.

** Registration u/s 12A or 12AA shall become inoperative from the date on which the trust or institution is approved under clause (23C) of section 10

Process of Registration:

Applying for registration:

1.  Application for registration shall be made in online mode through Income Tax Portal using their Income Tax Login credentials

a.  under digital signature, if the return of income is required to be furnished under digital signature;

b.  through electronic verification code in other cases

2.  The application shall be made in Form No. 10A (or 10AB as the case) may be within prescribed timeline as explained above.

3.  Applicant shall submit other relevant documents (Discussed separately below in this article)

Approval or Rejection of application:

On receipt of an application in Form No. 10A (or 10AB as the case may be), the Principal Commissioner or Commissioner, authorised by the Board within allowed timeline as explained above

1.  In case existing registration u/s 12AA or in case of Provisional Registration where Form 10A has been submitted –

·  shall pass an order in writing granting registration in Form No.10AC and 

·  issue a 16 digit alphanumeric Unique Registration Number (URN) to the applicants

(Provisional registration shall be effective from the assessment year beginning on 1st day of April, 2022.)

2.  In other cases i.e. where Form 10AB has been submitted –

·  The order of registration or rejection or cancellation of registration shall be issued in Form No.10AD and

·  in case if the registration is granted, 16 alphanumeric number Unique Registration Number (URN) shall be issued.

In addition Commissioner or Principal Commissioner may call for additional documents or information or make necessary inquiries in order to get satisfied about the genuineness of activities of the trust or institution and the compliance of under any other law which is material for the purpose of achieving its objects.

If he is still not so satisfied, he may pass an order in writing rejecting such application and also cancelling its registration after providing a reasonable opportunity of being heard to applicant.

If, at any point of time, it is noticed that Form No. 10A has not been duly filled in by not providing, fully or partly, or by providing false or incorrect information or documents required or by not complying with the requirements rules, the Principal Commissioner or Commissioner, after giving an opportunity of being heard, may cancel the registration in Form No. 10AC and Unique Registration Number (URN) and such registration or such Unique Registration Number (URN) shall be deemed to have never been granted or issued i.e. cancellation will be effective from day one.

List of Documents need to be submitted:

The application for registration shall be made in from 10A (or 10AB as the case may be) shall be accompanied by the following documents –

1. where the applicant is created, or established, under an instrument, self-certified copy of such instrument creating or establishing the applicant;
2. if created otherwise than under an instrument, self-certified copy of the document evidencing the creation or establishment of the applicant;
3. self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be;
4. If registered under Foreign Contribution (Regulation) Act, 2010, self-certified copy of registration under the Act,
5. self-certified copy of existing order granting registration under section 12A or section 12AA or section 12AB, as the case may be;
6. self-certified copy of order of rejection of application for grant of registration under section 12A or section 12AA or section 12AB, as the case may be, if any;
7. In case of existing trust or institution, self-certified copies of the annual accounts of the applicant relating to such prior 3 year;
8. where a business undertaking is held by the applicant as per the provisions of sub-section (4) of section 11, self-certified copy of the annual accounts and the report of audit as per the provisions of section 44AB for previous 3 years;
9. where the income of the applicant includes profits and gains of business as per the provisions of sub-section (4A) of section 11, self-certified copy of the annual accounts and the report of audit as per the provisions of section 44AB for previous 3 years;
10. self-certified copy of the documents evidencing adoption or modification of the objects;
11. note on the activities of the applicant

Conclusion:

By notifying the new law, the government is now made it mandatory for the trusts or societies to apply for fresh registration as per the new section. Hence trusts or societies should get themselves registered on priority to continue to claim the exemption benefits.

Note:

Author can be reached at r.vinayakhegde@gmail.com for any queries, issues & recommendations relating to the article.

DISCLAIMER: The contents of this article are solely for informational purposes. It does not constitute professional advice. The author does not accept any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

Rajeev Vinayak and Co. is a Team of professionals having good exposure in Corporate Laws, Registration of Trust and Society, Registration under 12A and 80G, Registration of entity for CSR activity. For professional assistance and advice, feel free to contact RVC (office@carv.co.in)