Income Tax Questions & Answers Series Consolidated
QUESTION: A Public Trust is to be created for Charitable Purposes in April,2021. The trust intends to claim benefits of Sections 11 and Section 12 from AY 2022-23. In this regard, what is the time limit for making an application for registration, time limit for granting approval by the Principal Commissioner or Commissioner and the period for which approval is valid?.
ANSWER : In order to avail exemptions under Sections 11 , the newly set up has to obtain registration U/s. 12AB read with Section 12A(1)(ac)(i) , as follows;
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Sr. No. |
Particulars | Time Limit |
| 1 | Registration Application is to be filed online as prescribed under Rule 17A. | Application to be made, at least one month prior to the commencement of the previous year elegant to AY from which said approval is sought.
Since registration is sought for from AY 2022-23 , the application is to be made n or before 28th February, 2021. However ,since new registration procedure has been introduced only with effect from 1st April,2021, the application made for provisional registration during Previous Year 2021-22, would be effective from AY 2022-23 according to the Rule 17A(7). |
| 2 | Grant of approval by Principal Commissioner or Commissioner Authorised by the Board( CBDT). | Within one month from the end of the month in which application for registration is made. |
| 3 | Validity period of approval. |
Provisional registration is valid for three years from the beginning of the AY for which registration is sought. In above case the Provisional Registration is valid for three years i.s. AY 2022-23,2023-24 & 2024-25. |
PLEASE NOTE THAT: the Public Trust can apply for Final Registration by filing relevant form in the online mode at least six months prior to expiry of period of Provisional Registration or within six months of commencement of activities of Public Trust ,whichever is earlier.
KEY AMENDMENTS IN SECTION 11 TO 12AB
Section 12AA – Procedure for Registration
- With effect from the 01/04/2021 following sub-section shall be inserted after sub-section (4), namely:
- “(5) Nothing contained in this section shall apply on or after the 01/04/2021”.
Section 12AB
After section 12AA of the Income-tax Act, the Section 12AB shall be inserted with effect from the 01/04/2021. That is Procedure for Fresh Registration.
Amendments in Section 12A
Condition for Applicability of Section 11 & 12 – effective from 01/04/2021.
– After clause (ab), a new clause (ac) has been inserted
– In subsection (2) certain Provisions have been substituted
Amendments in Section 11
SECTION 11(7)
- Where a trust or an institution has been granted registration u/s 12AA(1)(b) or u/s 12AB or u/s 12A and the said registration is in force for any previous year, then, nothing contained in section 10 [other than Section 10(23C)(1) and 10(46) thereof] shall operate to exclude any income derived from the property held under trust from the total income of the person in receipt thereof for that previous year.
- Provided that such registration shall become inoperative from the date on which the trust or institution is approved u/s 10(23C) or notified u/s 10(46) or the date on which this proviso has come into force, whichever is later:
- Provided further that the trust or institution, whose registration has become inoperative under the 1st proviso, may apply to get its registration operative u/s 12AA or u/s 12AB, subject to the condition that on doing so, the approval u/s 10(23C)(1) or 10(46), shall cease to have any effect from the date on which the said registration becomes operative and thereafter, it shall not be entitled to exemption under the respective clauses.”.
KEY AMENDMENTS IN SECTION 12A
In Sub-Section (1) after clause (ab) a new clause (ac) shall be inserted w.e.f. 01/04/2021, which states :-
- Notwithstanding anything contained in clauses (a) to (ab);
- the person in receipt of the income has made an application in the prescribed form and manner;
- to the Principal Commissioner or Commissioner, for registration of the trust or institution.
RULE – 17A – APPLICATION FOR REGISTRATION
Rule 17 A(1) – An application u/s 12A(1)(ac) for registration of a charitable or religious trust or institution shall be made in :-
1. Form 10A – in case of application under sub-clause (i) (Already registered u/s 12A or U/s 12AA) or under sub-clause (vi) (In any other case (residual category)) of section 12A(1)(ac).
2. Form 10AB – in case of application under sub-clause (ii) or (iii) or (iv) or of section 12A(1)(ac).
Rule 17 (2) –The application under sub-rule (1) shall be accompanied by the following documents, as required by Form Nos.10A or 10AB, as the case may be, namely:—
1. Where the applicant is created, or established, under an instrument, self- certified copy of such instrument creating or establishing the applicant;
2. where the applicant is created, or established, otherwise than under an instrument, self-certified copy of the document evidencing the creation or establishment of the applicant;
3. Self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be;
4. Self-certified copy of registration under Foreign Contribution (Regulation) Act, 2010(42 of 2010), if the applicant is registered under such Act;
5. Self-certified copy of existing order granting registration under section 12A or section 12AA or section 12AB, as the case may be;
6. Self-certified copy of order of rejection of application for grant of registration under section 12A or section 12AA or section 12AB, as the case may be, if any;
7. 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 of the applicant relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up;
8. where a business undertaking is held by the applicant as per the section 11(4) and 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 of such business undertaking relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up and self-certified copy of the report of audit as per the provisions of section 44AB for such period;
9. Where the income of the applicant includes profits and gains of business as per Section 11(4A) and 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 of such business relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up and self-certified copy of the report of audit as per the provisions of section 44AB for such period;
10. Self-certified copy of the documents evidencing adoption or modification of the objects;
11. Note on the activities of the applicant.
Rule 17 (3) – Form Nos. 10A or 10AB, as the case may be, shall be furnished electronically, —
1. Under digital signature, if the return of income is required to be furnished under digital signature;
2. Through electronic verification code in a case not covered under clause (i).
Rule 17 (4) – Form Nos. 10A or 10AB, as the case may be, shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the applicant.
Rule 17 (5) – On receipt of an application in Form No. 10A, the Principal Commissioner or Commissioner, shall pass an order in writing granting registration under clause (a), or clause (c), of section 12AB(1) read with sub- section (3) of the said section in FormNo.10AC and issue a sixteen digit alphanumeric Unique Registration Number (URN) to the applicants making application as per clause (i) of the sub-rule (1).
Rule 17 (6) – If, at any point of time, it is noticed that Form No. 10A has not been duly filled in by :-
1. Not providing, fully or partly, or
2. By providing false or incorrect information or
3. Documents required to be provided under sub-rules (1) or (2) or
4. By not complying with the requirements of sub-rules (3) or (4),
5. 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), issued under sub-rule (5), and such registration or such Unique Registration Number (URN) shall be deemed to have never been granted or issued.
Rule 17 (7) – In case of an application made under (ac) of sub-section (1) of section 12A(1)(ac)(vi) [In any other case (residual category)] during previous year beginning on 1st day of April, 2021, the provisional registration shall be effective from the assessment year beginning on 1st day of April, 2022.
Rule 17 (8) –
1. In case of an application made in Form No. 10AB under clause (ii) of the sub-rule (1),
2. The order of registration or rejection or cancellation of registration under section 12AB(1)(b)(ii) shall be in Form No.10AD and
3. In case if the registration is granted, sixteen digit alphanumeric number Unique Registration Number (URN) shall be issued by the Principal Commissioner or Commissioner.
Rule 17 (9) – The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall:
1. Lay down the form, data structure, standards and procedure of ,-
2. Furnishing and verification of Form Nos. 10A or 10AB ,as the case may be;
3. Passing the order under clause (a), sub-clause (ii) of clause (b) and clause (c) of sub-section (1) of section 12AB.
4. Be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said application made or order so passed as the case may be.
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