RENEWAL OR NEW REGISTRATION PROCESS FOR TRUST, SOCIETIES
In Union Budget 2020, Finance Ministry had proposed major amendments for granting exemptions u/s 12AA, 12AB and donation u/s 80G to trust, society or other institutions. Same were postponed due to COVID and other reasons. However on 26.03.2021, Ministry of Finance has notified rules for the implementation of these amendments.
Amendments or new registration process:
1. Need improvement with the advent of technology and keeping in mind the practical issue of difficulty in obtaining registration/ approval/ notification before actually starting the activities. In the past, the process of the registration was manual and scattered all over the country.
2. To make the process of registration completely electronic under which a 16 digit Unique Registration Number (URN) shall be issued to all new and existing charity institutions.
3. Approval or registration or notification for exemption should also be for a limited period, say for a period not exceeding five years at one time.
4. To ensure that the conditions of approval or registration or notification are adhered to for want of continuance of exemption.
5. For having a non-adversarial regime and not conducting roving inquiry in the affairs of the exempt entities on day to day basis.
6. To facilitate the registration of the new charity institution which is yet to start their charitable activities, to allow them provisional registration for three years.
7. To cross-check claim of donation by donor
Section 12A deals with conditions of applicability of section 11 & 12, where section 11 determine Income from property held for charitable or religious purposes and section 12 determine Income of trusts or institutions from contributions. Both of these sections allows exemption benefits. Clause (a), (aa) and (ab) of of subsection (1) of section 12A mandates requirement of registration under section 12AA for claiming exemption benefits of section 11 & 12. It must be noted that earlier registration to entities have been granted under section 12AA for claiming exemption benefits of section 11 & 12, nature of these registration were perpetual. However nothing contained in section 12AA shall apply after 31.03.2021
Recent changes & New Law:
1. Trust or Institution having existing registration u/s 12A or 12AA
Form No. 10A within 3 months from the 01.04.2021 within 3 months from the end of the month in which the application was received
2. Trust or institution is registered under section 12AB and the period of the said registration is due to expire (Section 12AB is under new process or new law effective from 01.04.2021)
Form No. 10AB at least 6 months prior to expiry within 6 months from the end of the month in which the application was received
3. Trust or institution has been provisionally registered under section 12AB (Section 12AB is under new process or new law effective from 01.04.2021)
Form No. 10AB at least 6 months prior to expiry of period of the provisional registration or within 6 months of commencement of its activities, whichever is earlier within 6 months from the end of the month in which the application was received
4. Registration of the trust or institution has become inoperative due to the first proviso to sub-section (7) of section 11. (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)
Form No. 10AB at least 6 months prior to the commencement of the assessment year from which the said registration is sought to be made operative within 6 months from the end of the month in which the application was received
5. Trust or institution has adopted or undertaken modifications of the objects which do not conform to the conditions of registration
Form No. 10AB within a period of 30 days from the date of the said adoption or modification within 6 months from the end of the month in which the application was received
6. Any other case (including provisional registration)
Form No. 10A, at least 1 month prior to the commencement of the previous year relevant to the assessment year from which the said registration is sought, and such trust or institution is registered under section 12AB within 1 month from the end of the month in which the application was received
Note: Existing Form 10A has been replaced by new Form 10A
Accordingly all cases where trust, societies or institutions have existing registration under section 12AA need to apply for registration under section 12AB online by 30.06.2021 by filing form 10A. Please note validity of registration will be for 5 years in all cases except in case of Provisional Registration where validity will be for 3 years only. Form no. 10A or 10AB as the case may be required to be digitally signed, if Income Tax Return to be furnished with DSC, otherwise same can be submitted with Electronic Verification Code. Form Nos. 10A or 10AB, as the case may be, shall be verified by the person who is authorised to verify the Income Tax Return.
What is the Process of Registration?
Step 1: Applicant (Trust, society or other Institutions) shall apply for registration over Income Tax Portal using their Income Tax Login credentials in Form No. 10A (or 10AB as the case) may be within prescribed timeline as explained above.
Step 2: 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)
- In case of applicant who is already registered 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.)
- In other cases i.e. where Form 10AB has been submitted – the order of registration or rejection or cancellation of registration shall be in Form No.10AD and in case if the registration is granted, 16 alphanumeric number Unique Registration Number (URN) shall be issued.
In case Commissioner or Principal Commissioner thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution; and the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects he may call for such documents or information from the trust or institution or make such inquiries. 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.
Changes in new Form 10A or 10AB:
1. In case PAN or Aadhaar number of Author/Founder/ Settlor/Trustee/ Member of society/Member of the Governing Council/ Director/ shareholder holding 5% or more of shareholding / Office Bearer is not available they can provide Taxpayer Identification Number of the country where the person resides, Passport number, Elector’s photo identity number, Driving License number or Ration card number.
2. Now applicant need to provide detail of registration on DARPAN Portal or under FCRA Act or any provision of Income-tax Act.
3. Applicants need to confirm if they have filed Income Tax Return of last assessment year.
4. Earlier 10G form for 80G registration has been withdrawn, same can be applied now with Form 10A or 10AB as the case may be.
5. Applicant need to provide detail of Income & Expenditure of Religious Activity
6. Applicant needs to provide following details related to Assets & Liabilities and Income
7. In case if applicant is already registered u/s 12AA and have filed ITR of last assessment year, above Asset & Liabilities and Income detail is not mandatory.
8. This list of changes in not exhaustive, in case of Form 10AB, there are some other changes