The Finance Bill 2024 proposes to streamline the processing timelines for applications by trusts, funds, or institutions seeking registration under section 12AB or approval under section 80G of the Income-tax Act. Currently, these applications must be processed within six months from the end of the month in which they are received. The amendment suggests rationalizing this timeline to six months from the end of the quarter in which the application is received, aiming for better administrative efficiency. This change affects both initial applications and those seeking further registration or approval. Additionally, adjustments to specific provisions under sections 12AB and 80G are outlined, including amendments to deadlines and procedural rules governing the approval process. These modifications are scheduled to take effect from October 1, 2024, enhancing clarity and predictability in the tax exemption and approval procedures for trusts, funds, and institutions.
Budget 2024: Rationalisation of timelines for disposing applications made by trusts or funds or institutions, seeking registration for exemption under section 12AB or approval under section 80G
Applications seeking registration under section 12AB, filed by trusts or institutions, are required to be processed by the Principal Commissioner or Commissioner within a period of six months from the end of the month in which the application was received.
2. Similarly, the applications of funds or institutions referred to in sub-clause (iv) of clause (a) of sub-section (2) of section 80G, seeking approval are required to be processed by the Principal Commissioner or Commissioner within a period of six months from the end of the month in which the application was received.
3. For better administration and monitoring, it is proposed to rationalise timelines for disposing applications made by trusts or funds or institutions to six months from the end of the quarter in which the application was received.
4. Thus, where provisionally registered/ approved trusts or funds or institutions apply for registration/ approval or where registered/ approved trusts or funds or institutions apply for further registration/ approval under section 12AB or section 80G, as the case may be, the order granting registration/ rejecting application shall be passed before expiry of the period of six months from the end of the quarter in which the application was received.
5. These amendments will take effect from the 1st day of October, 2024.
[Clauses 7 & 26]
Extract of Clause 7 of Finance Bill 2024
Clause 7 of the Bill seeks to amend section 12AB of the Income-tax Act relating to procedure for fresh registration.
Sub-section (3) of the said section provides that the order under clause (a), sub-clause (ii) of clause (b) and clause (c), of sub-section (1) shall be passed, in such form and manner as may be provided by rules, before expiry of the period of three months, six months and one month, respectively, calculated from the end of the month in which the application was received.
It is proposed to amend sub-section (3) of the said section so as to provide that the order under sub-clause (ii) of clause (b) of sub-section (1) shall be passed, in such form and manner as may be provided by rules, before expiry of the period of six months from the end of the quarter in which the application was received.
This amendment will take effect from 1st October, 2024.
Extract of Clause 26 of Finance Bill 2024
Clause 26 of the Bill seeks to amend section 80G of the Income-tax Act relating to deduction in respect of donations to certain funds, charitable institutions, etc.
Sub-clause (iiihg) of clause (a) of sub-section (2) of the said section provides that in computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, any sums paid by the assessee in the previous year as donations to the National Sports Fund to be set up by the Central Government.
Since, the Central Government had already set up the said fund by the name National Sports Development Fund with effect from 12th November, 1998, it is proposed to amend sub-clause (iiihg) of clause (a) of the said sub-section so as to substitute the expression “The National Sports Fund to be set up” with the expression “The National Sports Development Fund set up”.
This amendment will take effect from 1st April, 2025, and will, accordingly, apply in relation to the assessment year 2025-2026 and subsequent years.
First proviso to sub-section (5) of the said section provides that the institution or fund referred to in clause (vi) shall make an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval.
It is further proposed to amend the first proviso to sub-section (5) of the said section so as to insert “or” between the clause (iii) and (iv) of the said first proviso and to amend clause (iv) of first proviso thereof to provide that, where activities of the institution or fund have not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought; or commenced, at any time after the commencement of such activities shall make an application for grant of approval.
Item (B) of sub-clause (b) of clause (ii) of second proviso to sub-section (5) of the said section, inter alia, provides that the Principal Commissioner or Commissioner, on receipt of an application made under the first proviso, shall where the application is made under clause (ii) or clause (iii) or sub-clause (B) of clause (iv) of the first proviso, after satisfying himself about the genuineness of activities and the fulfilment of all the conditions if he is not so satisfied, pass an order in writing, in this manner specified therein after affording it a reasonable opportunity of being heard.
It is also proposed to amend item (B) of sub-clause (b) of clause (ii) of second proviso to the said sub-section (5) to provide that if the Principal Commissioner or Commissioner is not so satisfied, shall pass an order in writing, rejecting such application and cancelling its approval, if any, after affording it a reasonable opportunity of being heard.
Third proviso to sub-section (5) of the said section provide that the order under clause (i), sub-clause (b) of clause (ii) and clause (iii) of the second proviso to the said sub-section (5) shall be passed in such form and manner as may be provided by rules, before expiry of the period of three months, six months and one month, respectively, calculated from the end of the month in which the application was received.
It is also proposed to amend the third proviso to said sub-section (5) to omit that the order under sub-clause (b) of clause (ii) of the second proviso to the said sub-section (5) shall be passed in such form and manner as may be provided by rules, before expiry of the period of six months, calculated from the end of the month in which the application was received.
It is also proposed to insert a proviso after the third proviso to sub-section (5) of the said section to provide that the order under sub-clause (b) of clause (ii) of the second proviso shall be passed in such form and manner as may be provided by rules, before expiry of the period of six months from the end of the quarter in which the application was received.
These amendments will take effect from 1st October, 2024.
Proposed Amendment to section 12AB of Income Tax Act, 1961 vide Finance Bill, 2024
In section 12AB of the Income-tax Act, for sub-section (3), the following sub-section shall be substituted with effect from the 1st day of October 2024, namely:––
“(3) The order under sub-section (1) shall be passed, in such form and manner as may be prescribed, within a period of,––
(i) three months calculated from the end of the month in which the application was received in case of clause (a);
(ii) six months calculated from the end of the quarter in which the application was received in case of sub-clause (ii) of clause (b); and
(iii) one month calculated from the end of the month in which the application was received in case of clause (c).”.
Proposed Amendment to section 80G of Income Tax Act, 1961 vide Finance Bill, 2024
In section 80G of the Income-tax Act,––
(a) in sub-section (2), in clause (a), in sub-clause (iiihg), for the words “the National Sports Fund to be set up”, the words “the National Sports Development Fund set up” shall be substituted with effect from the 1st day of April, 2025;
(b) in sub-section (5), with effect from the 1st day of October, 2024,––
(I) in the first proviso,––
(i) in clause (iii), for the words “whichever is earlier;”, the words “whichever is earlier; or” shall be substituted;
(ii) in clause (iv),––
(a) the words “in any other case,” shall be omitted;
(b) in sub-clause (B), the portion beginning with the words “and where no income or part” and ending with the words “such application,” shall be omitted;
(II) in the second proviso, in clause (ii), in sub-clause (b), for item (B), the following item shall be substituted, namely:––
“(B) if he is not so satisfied, pass an order in writing, rejecting such application and cancelling its approval, if any, after affording it a reasonable opportunity of being heard;”;
(III) for the third proviso, the following proviso shall be substituted, namely:––
“Provided also that the order under clause (i) and clause (iii) of the second proviso shall be passed in such form and manner as may be prescribed, before expiry of the period of three months and one month, as the case may be, calculated from the end of the month in which the application was received:”;
(IV) after the third proviso, the following proviso shall be inserted, namely:––
“Provided also that the order under sub-clause (b) of clause (ii) of the second proviso shall be passed in such form and manner as may be prescribed, before expiry of the period of six months from the end of the quarter in which the application was received:”.
