The Finance Act 2020 had made significant changes to the governance framework for existing as well as new Trusts/Institutions in India. The new procedure was supposed to be rolled out from 1st June, 2020 but considering the current pandemic situation, it was extended to 1st April, 2021. 

Under the new tax regime, it was proposed to amend Section 10(23C), Section 11, Section 12A, Section 12AA and Section 80G of the Income Tax Act, 1961 (“IT Act”) and proposed to insert a new Section 12AB. All the existing Charitable Trust or Institutions registered under these sections will have to apply afresh registration under the new provisions of sections 12AB on or after 1st April 2021 till 31st March 2022. 

Budget 2020 proposes to digitize the process of registration for Charitable Trusts. Even the existing charitable institutions are required to apply for fresh registration under the new provisions of Sec 12AB of Income Tax Act. Undoubtedly, the new regime will ensure better accountability & transparency for NGOs but definitely initial compliance burden could be felt by the NGOs of smaller size and particularly the ones in rural areas. 

REGISTRATION U/S 12 AB

 All the existing charitable and religious institutions (including NGOs) which are registered or approved under the following sections-

are compulsorily required to switch to section 12AB for fresh registration in order to continue availing exemption under section 10 or 11, as the case may be. 

FORMS TO BE FILLED IN AND VERIFICATION

Form 10A: (Last date of filling – 31.03.2022) 

  1. Application for revalidation of registration/approval for existing organizations registered/approved under section 12A/12AA/80G.  
  2. Application    for       provisional     registrations/approval          under section           12AB/80G 

Form 10AB: (before 6 months of expiry of previous registration)  

  1. Conversion of provisional registration into regular registration 
  2. Renewal of registration/approval after five years  
  3. Activating inoperative registration under section 10(23C)/10(46) 
  4. Re-registration for modification of objects for entities registered u/s 12. 

Time limit for registration under section 12A(1)(ac) and section 12(AB)

Sub-clause of clause (ac) of section 12A(1) Category Entityof Time limit filing application registrationfor for Applicable FormTime limit for passing order
(i)  Trusts or societies already registered u/s 12A or 12AA  Before 31.03.2022Form 10A Within              3 months from the end of the month in which the application is received 
(ii) Trusts             or institutions which are registered under section 12AB and the period of the said registration is due to expire At least 6 months before the expiry of the said period Form 10ABWithin              6 months from the end of the month in which the application was received 
(iii) New trusts or institutions which have been granted provisional registration under section 12AB (Trustsopting            for provisional to final registration for 5 years)At least 6 months before the expiry of the provisional registration or within 6 months of commencementof its activities, whichever is earlier Form 10ABWithin              6 months from the end of the month in which the application was received 
(iv) Trusts             or institutions whose registration    has become inoperative due to first proviso to section 11(7) of the Act. Registration At least 6months before thecommencementof         the assessment year from which the said registration is sought to be made operative Form 10ABWithin              6 months from the end of the month in which the application was received 
 u/s 12A or 12AA shall   become inoperative from the      date    on which the trust or institution is granted registration u/s 10(23C)   
(v) Trusts             or institutions who has adopted or undertaken modifications of the objects which do not conform the conditions of registration Within a period of 30 days from the date of adoption or modification Form 10ABWithin               6 months from the end of the month in which the application was received 
 (vi)  In any other case (including fresh provisional registration)   At least 1 month before commencement of the previous year relevant to assessment year from which the said registration is sought  Form 10A Within 1 month from the end of the month in which the application is received 

ONLINE PROCEDURE OF REGISTRATION UNDER SECTION 12AB

Step-1: Log in to Income Tax India E-Filing Portal using login credentials and password. 

Step-2: Navigate to “Income Tax Forms” under E-File tab and select Form 10A/ 10AB, as the case may be. 

Step-3: Select the option “Prepare and Submit online” to fill requisite details in the form. 

Step-4: Attach the requisite document along with Form 10A/10AB. 

Step-5: Submit the form using digital signatures or EVC. 

Step-6: On receipt of application in Form No. 10A/10AB, the PCIT or CIT shall process the application within the prescribed time limit: - 

CONTENTS REQUIRED TO BE FURNISHED IN FORM 10A:-

If yes, details of the order cancelling the same. 

DOCUMENTS TO BE FURNISHED ALONG WITH APPLICATION FORM

The documents which are required to be furnished along with application Form No. 

10A are as follows: 

Firms and Societies or Registrar of Public Trusts, as the case may be; 

REGISTRATION PROCESS UNDER SECTION 10(23C), 80G FOR CHARITABLE TRUSTS

Similar amendment in registration/ renewal procedure has also been made in section 10(23C), 80G. Thus, the existing trusts/ institutions will now have to apply for fresh registration under section 10(23C), 80Gsimilar to the same manner as applicable in section 12AB. Such application shall be made through Form No. 10A or 10AB, as the case may be. 

Also an important change which has been made by the Finance Act, 2021 is that trusts or institutions who are registered u/s 80G shall now have to furnish a statement containing details of donations received during the year in Form No. 10BD in the prescribed manner in respect of each financial year, beginning from FY 2021-22. This Form is to be e-filed before 31st May of each financial year immediately following the financial year in which the donation is received.  

Further, the trust or institution shall issue a certificate of donation to the donor in Form No. 10BE

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