The Union Budget and Finance Bill 2020 has proposed major changes for charitable trusts and institutions like renewal of 12AA and 80G registration, furnishing a quarterly statement of donor wise donations, issue of a certificate to all the donors, etc. All such proposed changes are explained below:
Section 10(23C):
Every approved fund or trust or institution or university or other educational institution or hospital or other medical institution specified under section 10(23C) shall make a fresh application for grant of approval latest by 31st August 2020.
Such fresh approval will be made for five years only.
Income Tax Department must pass an order for such approval within three months of the application.
All assessee must make a fresh application for grant of approval after every 5 years.
Section 11, 12AA and 12AB:
Every registered trust or institutions shall make a fresh application for grant of approval latest by 31st August 2020.
Such fresh approval will be made for five years only.
Income Tax Department must pass an order for such approval within three months of the application.
All assessee must make a fresh application for grant of registration after every 5 years.
A trust or institution having approval under both section 10(23C) and section 12AA can now apply for either of the registration.
Every trust or institutions making an application for registration under section 12AB shall be grated a provisional registration for three years. Such provisional registration holder shall make a fresh application for registration at least six months prior to the expiry of the provisional registration or within six months of commencement of its activities, whichever is earlier.
Section 12AA shall cease to exist effective from 1st June 2020 and Section 12AB shall be inserted from the same date. Section 12AB shall govern the provisions of registration process with effect from 1st June 2020.
Section 80G:
Every registered trust or institutions shall make a fresh application for grant of approval latest by 31st August 2020.
Such fresh approval will be made for five years only.
Income Tax Department must pass an order for such approval within three months of the application.
All assessee must make a fresh application for grant of registration after every 5 years.
Every trust or institutions making an application for registration under section 80G shall be grated a provisional registration for three years. Such provisional registration holder shall make a fresh application for registration at least six months prior to the expiry of the provisional registration or within six months of commencement of its activities, whichever is earlier.
Every registered trust or institutions shall prepare and furnish a statement as may be prescribed (which contains the details of donors alongside donation received by the trust or institutions).
After furnishing such a statement, a trust shall issue a certificate to Donor specifying the donation details.
Explanation 2A has been inserted under section 80G(5D) by the Finance Bill 2020 which mandates the furnishing of details of donors by the trust for claiming deduction under section 80G by any donor while filing his income tax return.
Section 80GGA:
Limit for donation is cash has been reduced from Rs 10,000 to Rs 2,000.
Deduction under section 80GGA to the donor shall be allowed on the basis of statement furnished by the payee to income tax department from time to time.
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