Fresh application of registration for existing Trusts/Institutions under section 12AB w.e.f. 1st April, 2021

Fresh application of registration for existing Trusts/Institutions under section 12AB w.e.f. 1st April, 2021

To update register of Charitable and Religious Trusts, the Finance Minister of our Country, Smt. Nirmala Sitaraman had presented a proposal in Union Budget 2020, to make substantial amendments for granting registration to the Charitable / Religious Trusts, Institutions etc. Under the new tax regime, it was proposed to amend Section 10(23C),  Section 12A, Section 12AA, Section 35 and Section 80G(5) of the Income tax Act, 1961 and proposed to insert new Section 12AB. All these amendments are proposed to be made w.e.f. June 2020. The said budget proposes to digitize the process of registration for Charitable Trusts. Even the existing charitable institutions are also required to apply for fresh registration under the new provisions of Section 12AB of the I. T. Act, 1961. All the existing Charitable Trust or Institutions registered under the following sections, Section 12A, Section 12AA, Section 10(23C), Section 35 and Section 80G need to be registered under the new provisions to claim exemption as the case may be.

Due to this, procedure for registration under section 12AA of Income Tax Act, 1961 has been omitted w.e.f. June 01, 2020 due to insertion of subsection (5) in Section 12AA, which read as under,

Section 12AA(5) Nothing contained in this section shall apply on or after the 1^st Day of June, 2020 and a new Section 12AB (Procedure for fresh registration) was come in to effect from 1^st June,2020. With the proposed amendments, new Section 12AB(Procedure for fresh registration) was to come in to effect from 1^st June, 2020 and the Trusts or Institutions was required to apply for fresh registration and approval under new Section 12AB within 3 months from 1^st June 2020, i.e. by 31^st August, 2020. Similarly, Charitable Trusts and Exempt Institutions which are availing exemption benefit under Section 80G of the I.T.Act was also required to apply for fresh registration under Section 80G by 31^st August, 2020.

Subsequently, in view of the economic crisis due to COVID – 19 pandemic and the resultant nationwide lockdown, the CBDT had decided to defer the implementation of the new procedure for approval/registration/notification of certain entities to 1^st October,2020. Accordingly, the entities approved/registered/notified under Section 10(23C),12AA,35 and 80G of the Income Tax Act, 1961 would be required to file intimation within three months from 1^st October 2020, i.e.by 31^st December, 2020. The same amended procedure for approval/registration/notification of new entities also deferred  till 1^st October, 2020. This was issued by CBDT by way of Press Note dated 9^th May, 2020. However, no legislative amendments were carried out till then.

Later on, legislative amendments were introduced by the Taxation and Other Laws (Relaxation and Amendments of certain provisions) Act, 2020 which has further extended the new registration and other procedure under Section 12AB of the Income Tax Act, 1961 and other Sections to April 1, 2021. These amendments were carried out in all the related provisions which were introduced by the Finance Act, 2020. Hence new provisions related to charitable trusts and other institutions shall now apply from the Finance Year 2021-22.

Now, the new registration procedure prescribed under Section 12AB for Charitable Trusts and other related provisions as introduced by the Union Budget 2020 has been deferred and extended to April 1, 2021 by the Taxation and Other Laws ( Relaxation and Amendment of certain Provisions) Act, 2020. Both the renewal of registration/s 12A or section 12AA, as well as renewal of approval under section 80G, is being deferred.

Very surprisingly, to note that all the amendments made by the Finance Act, 2020 in Income Tax Act, 1961 have been withdrawn first and reintroduced all these amendments from April,1^st 2021. Now all the trusts and institutions is required to apply for registration and approval under new section 12AB of Income Tax Act within 3 months from April, 2021 i.e. by 30^th June, 2021.

Section 12AB, introduced by Finance Act 2020, i.e. the new procedure for registration , was supposed to introduced from

1^st June, 2020 to 31^st August, 2020 which was deferred and extended to,

1^st October, 2020 to 31^st December, 2020 again it has been extended to,

1^st April, 2021 to 30^th June, 2021

Along awaited Bill was introduced by our Finance Minister, on 26^th March, 2021, which will come into force from 1^st April,2021.

The bill has covered all the above Sections like 10(23C), 12A, 12AB, 35 and 80G of the Income Tax Act 1961.

RNEWAL APPLICATION FOR SECTION 10(23C):

A. Rule 2C. Application for the purpose of grant of approval of a fund or trust or institutions or university or any hospital or other medical institutions under Section 10(23C) clause i or ii or iii or iv of the first proviso, shall be made in the following Form.

Form No 10A in case of application under clause (i) or (iv) and

Form No 10AB in case of application under clause (ii) or (iii).

The application is to be made to the Principal Commissioner or Commissioner authorized by the Board

B. The application shall be accompanied by the following documents:

• Where the application is created or established, under an instrument, self certified copy of such instrument,
• Where the applicant is created or established, otherwise than under an instrument, self certified copy of document evidencing the creation of the trust,
• Self certified copy of registration with Registrar of Companies or registrar of firms or Societies or Registrar of Public Trust,
• Self certified copy of registration under Foreign Contribution (Regulation) Act, 2010
• Self certified copy of existing order granting approval under section 10(23C),
• If an application u/s 10(23C) has been rejected in past, copy of that order
• Where the application has been in existence during any year or years prior to the financial year, self certified copies of annual accounts of last three years
• Where a business undertaking is held by the applicant as per provision of Sec.11(4) or 11(4A), self certified copies of last three years  annual accounts and self certified copy of audit report u/s 44AB for such period
• Notes on the activities of the applicant.

 C. Form No 10A or 10AB, as the case may be, shall be furnished electronically,

• Under digital signature, if the return of income is required to be furnished under digital signature;
• Through electronic verification code in a case not covered above.

D. Form Nos. 10A or 10AB shall be verified by the person who is authorized to verify the return of income u/s 140

E. On receipt of an application in Form No 10A, the Principal Commissioner or Commissioner authorized by the board shall pass an order in writing granting approval under 10(23C)(i) or (iii) in Form No 10AC and issue a sixteen digit alphanumeric Unique Registration Number(URN) to the applicants.

F. If, at any point of time, it is notice that Form No 10A has not been properly filed in by not providing, fully or partly or incorrect information or documents required to be provided or not complying with the requirements, Principal Commissioner or Commissioner, after giving an opportunity of being heard may cancel the approval granted in Form No 10AC and URN issued. Approval in Form 10AC and URN shall be deemed to have never been issued or granted.

G. In case of an application made under section 10(23C)(iv) during previous year beginning 1^st Day of April, 2021, the provisional approval shall effective from assessment year beginning on 1^st April, 2022.

H. In case of an application made in Form No 10AB, under Section 10(23C)(1)(ii) shall be in Form No10AD and in case of approval is granted, sixteen digit alphanumerical number Unique Registration Number (URN) shall be issued, by the Principal Commissioner or Commissioner.

I. The Principal Director General of Income Tax (Systems) or the Director General of Income Tax(System), as the case may be shall:

• Lay down the form, data structure, standards and procedure of :

( a ) furnishing and verification of Form No 10A or 10AB as the case may be:

( b ) passing the order under the second proviso to Sec.10(23C)

• Be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the form so furnished or the order so passed.

RENEWAL APPLICATION FOR SECTION 35(1):

In the principal rules, after Rule 5C, the following rule shall be inserted, namely:

5CA Intimation under Fifth Proviso to sub section(1) of Section 35:

A. An intimation under the fifth proviso of Section 35(1) by a research association, university, college or other institution shall be made in Form No.10A to the Principal Commissioner or Commissioner authorized by the Board.

B. The application under sub rule(1) shall be  accompanied by the following documents, as required by Form No 10A, namely:

• Where the applicant is created or established under an instrument, self certified copy of the instrument;
• Where the applicant created or established otherwise than under an instrument, self certified copy of the document, evidencing the creation or re establishment of the applicant;
• Self certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts or other registration document as the case may be;
• Self certified copy of registration under Foreign Contribution (Regulation) Act, 2010, if applicable;
• Self certified copy of existing Notification granting approval u/s 35

C. Form No 10A shall be furnished electronically:

(i) under digital signature, if return of income is to be furnished under digital signature

(ii) through electronic verification code in a case not covered under clause (i)

D. Form No 10A shall be verified by the person who is authorized to verify the return of income u/s 140

E. On receipt of an application in Form No 10A, the Principal Commissioner or Commissioner, authorized by the Board shall issue sixteen digit alphanumerical Unique Registration Number(URN);

F. If, at any point of time, it is noticed that that Form No 10A has not been duly filed in by not providing fully or partly, or by providing false or incorrect information or documents, or by not complying with the required particulars, Principal Commissioner or Commissioner, after giving an opportunity of being heard , may cancel the URN shall be deemed to have never been issued.

RENEWAL FOR APPROVAL OF INSTITUTION OF FUND U/S 80G(5)

In the principal rules, for Rule 11AA, the following rule shall be substituted, 80G.         

A. An application for approval under Section 80G(5)(vi), the applicant shall be made in the following Form, namely:-

(a)  Form No 10A in case of application under section 80G(5)(iv) to the Principal Commissioner or Commissioner authorized under said proviso;

(b) Form No 10AB in case of application under section 80G(5)(ii) to the  Principal Commissioner or Commissioner authorized under the said proviso.

B. he application under sub rule(1) shall be accompanied by the following documents, as required by Form No 10A or 10AB as the case may be, namely:-

• where the applicant is created, or established, under an instrument, self certified copy of the instrument;
• Where the applicant created or established otherwise than under an instrument, self certified copy of the document, evidencing the creation or re establishment of the applicant;
• Self certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts or other registration document as the case may be;
• Self certified copy of registration under Foreign Contribution (Regulation) Act, 2010, if applicable;
• Self certified copy of existing Notification granting registration u/s 80G(5)
• Where the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self certified copies of the annual accounts, relating to such prior year or years (not more than 3 years)
• Note on the activities of the applicant

C. Form No 10A or 10B, as the case may be, shall be furnished electronically:

(i) under digital signature, if return of income is to be furnished under digital signature

(ii) through electronic verification code in a case not covered under clause (i)

D. Form No 10A or 10AB as the case may be, shall be verified by the person who is authorized to verify the return of income u/s 140

E. On receipt of an application in Form No 10A, the Principal Commissioner or Commissioner, authorized by the Board shall issue sixteen digit alphanumerical Unique Registration Number(URN);

RENEWAL APPLICATION FOR SECTION 12A:

Application for registration of charitable and religious trust etc.

A. An application under section 12A for registration of a charitable or religious trust or institution shall be made in the following Forms, namely:

(i) Form No 10A in case of application under sub clause (i) or (vi) of clause (ac) of sub section (1) of Section 12A to the Principal Commissioner or Commissioner authorized by the Board, or

(ii) Form No 10AB in case of application under sub clause (ii) or (iii) or (iv) or (v) of clause (ac) of sub section(1) of Section 12A to the Principal Commissioner or Commissioner under the said clause.

B. The application under sub rule(1) shall be accompanied by the following documents, as required by Form No 10A or 10AB as the case may be, namely:-

• where the applicant is created, or established, under an instrument, self certified copy of the instrument;
• Where the applicant created or established otherwise than under an instrument, self certified copy of the document, evidencing the creation or re establishment of the applicant;
• Self certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts or other registration document as the case may be;
• Self certified copy of registration under Foreign Contribution (Regulation) Act, 2010, if applicable;
• Self certified copy of existing Notification granting registration u/s 12A or Section 12A or Section 12AB as the case may be
• Self certified copy of order of rejection of application for grant of registration u/s 12A, 12AA or 12AB as the case may be.
• Where the applicant has been in existence during any year or years prior to the financial year in which the application for registration is made, self certified copies of the annual accounts, relating to such prior year or years (not more than 3 years)
• Self certified copy of documents evidencing adoption or modification of object clause
• Note on the activities of the applicant.

C. Form No 10A or 10B, as the case may be, shall be furnished electronically:

(i) under digital signature, if return of income is to be furnished under digital signature

(ii) through electronic verification code in a case not   covered under clause (i)

D. Form No 10A or 10AB as the case may be, shall be verified by the person who is authorized to verify the return of income u/s 140

E. On receipt of an application in Form No 10A, the Principal Commissioner or Commissioner, authorized by the Board shall issue sixteen digit alphanumerical Unique Registration Number(URN);

F. 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 to be provided, the Principal Commissioner or Commissioner, after giving an opportunity of being heard may cancel the registration in Form No 10AC and URN issued also,

G. In case of an application made under 12A during previous year begging on 1^st April, 2021, the provisional registration shall be effective from the asst. yr. beginning on 1^st April, 2022