In union budget of 2020, the honourable finance minister introduced a major change for granting exemption under section 12AA, 12AB and donation under section 80G to trust, society and other charitable establishments etc.

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Compliances related to Charitable Trusts

Section 12AB is an amendment introduced by the ministry relating to the compliance and registration process of religious or Charitable Trusts/ Institutions etc. which were earlier registered under section 12AA of the Income Tax Act.

Section 12A deals with a one-time registration of trusts and other not for profit establishments granted by the Income Tax Department. The institution registered under this section is to be exempted from the income tax payment. Section 8 Companies, Trusts and NGOs which have obtained 12AB registration enjoy exemption from paying income tax on their surplus income.

Eligibility criteria for registration of Charitable Trusts

All the currently registered or approved charitable and religious institutions (including NGOs) under the following sections-

  • Section 12A
  • Section 12AA
  • Section 10(23C)
  • Section 80G

are compulsorily required to switch to section 12AB for fresh registration in order to continue availing exemption under section 10 or 11.

Registration Process of Religious or Charitable Trusts

Case 1:- Where a trust or institution is already registered under section 12A or 12AA

Then the entity should apply for new registration underneath section 12AB within 30.06.2021, which will be valid for a period of 5 years. It begins from the assessment year from which registration was granted before to the charitable trust or institution. 

Case 2:- Where a Charitable trust or institution is provisionally registered under section 12AB, which be valid for 3 years from the grant of provisional registration. It begins from the first assessment year in which provisional registration was granted. 

The application for the above can be applied by filing Form 10A online on the income tax site incometaxindiaefiling.gov.in

First login into the portal using your ID and password. The form is available on the income tax website under e file menu tab Income Tax Forms. Fill the required details in the form asking for:-

 (1) Name of the Trust, Society, Religious and charitable establishments.

(2) PAN details of the above applicants.

(3) Registered Address of the entity.

(4) Select the type of organization:- Religious/ Charitable/ Religious-cum-Charitable

(5) E-Mail and Mobile number of the authorized person by whatever name called

(6) Legal Status of the entity 

(7) Objects of the entity

(8) Date of Modification of Objects, if any.

(9) Whether the application granted or registration earlier is rejected or cancelled? If yes, details of the same should also be provided.

(10) If the applicant is registered under FCRA, 2010? If yes, then details of the same should also be provided.

Documents required for Registration of Religious or Charitable Trusts:

Following documents are required to be annexed with FORM 10A while registration:-

  • Registration Certificate and MOA / Trust Deed (two copies- self attested by the Managing Trustee)
  • No objection certificate from the Landlord where registered office is situated (if place is rented) and electricity bill of the same is required.
  • Copy of PAN card of Trust.
  • Books of Accounts, financial statements, ITR (if any) since inception or last 3 years.
  • List of Governing body or members of the trust/ Institution 
  • Trust Deed 
  • Any other information / document as may be asked by the Income Tax Department.

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