We know that in Budget, 2024 there are few amendment under the Income Tax Act, 1961. In fact 99 changes under Direct Tax Act and 54 changes are made in Indirect Taxes, which includes Customs, Excise, Central Goods and Service Tax and Integrated Goods, Service Tax, Union Territory Goods and Service tax and Goods and Service Tax.
Under Direct Taxes i.e. Income Tax Act certain amendments are made out of which we will discuss about Provisions relating to Trusts.
Condonation of delay in filling application for registration by trusts or institutions:
A trust or institution desirous of seeking registration u/s 12AB for claiming exemption in respect of income, is required to apply in Form No 10A(Provisional Registrations/ Form No 10AB(Final Registration)within time limit specified in Section 12A(1)(ac).
In case a trust or institution is unable to apply with in time specified, it may become liable to tax on accreted income as per provisions of Chapter XII-EB of the Act and the trust or institution cannot claim exemption 11 permanently.
Further, the existing Section 12A does not have provision for condonation of delay in filling Form No 10A and Form No 10AB by Principal Commissioner or Commissioner.
After considering the various representations, CBDT vide circular No. 07/2024 dated 25th April, 2024 has extended the due date of filing Form No 10A/Form No 10AB up to 30th June, 2024.
Hence it is proposed to insert the proviso to clause (ac) of Section 12A (1), to provide that where the application is filed beyond the time allowed in Section 12A(1)(ac), the Principal Commissioner or Commissioner may, if he considers that there is a reasonable cause for delay in filling the application, condone such delay and such application shall be deemed to have been filed within time.
This amendment will take effect from the 1st October, 2024.
Rationalization of timelines for funds or institutions to file applications seeking approval under section 80G:
The provisions of Section 80G provides for the grant of approval to certain funds or institutions for receiving donation. In the hands of the assesse who is making donation to approved Trust or Institution, deduction is available u/s 80G (5).
The first proviso to sub-section (5) of Section 80G provides timelines for filling application for approval, for funds or institutions and the second proviso lays down the procedure for processing the same.
Considering the various representations, CBDT vide circular No. 07/2024 dated 25th April, 2024 has extended the due date of filling approval u/s Form 10A/Form 10AB up to 30th June, 2024.
It has been noted that at times funds or institutions are unable to file within specified timelines and facing the situation of unintended permanent exit of fund or institution from section 80G approval.
The existing provision provides that when the trust or institution has commenced the activities and such trust or institution has not claimed the exemption u/s 11, u/s 12 or under sub clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of Section 10(23C) for any previous year ending on or before the date of such application, can make an application at any time after the commencement of such activities
It is proposed to amend the first proviso to sub section (5) of the said section so as to provide that, if the trust or institution has commenced the activities shall make an application for grant of approval at any time after the commencement of such activities.
It is also proposed to amend item (8) of sub clause (b) of clause (ii) of second proviso to the said sub section(5) to provide that 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 is reasonable opportunity of being heard.
These amendments will take effect from the 1st October, 2024.
Rationalization of timelines for disposing applications made by trusts or funds or institutions, seeking registration for exemption u/s12AB or approval u/s 80G:
As per the existing provision of Section 12AB and 80G, an application seeking registration/s 12AB and approval u/s 80G 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.
For better administration and monitoring, it is proposed to amend Section 12AB (3) and 80G so as to regionalized 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.
Thus, where provisionally registered u/s 12AB or approved u/s 80G, trust or funds or institutions apply for registration/approval or where registered/approved trusts or funds or institutions apply for further registration/approval or where registered/approved trusts or funds or institutions apply for further registration/approval u/s 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 month from the end of quarter in which the application in which the application was received.
These amendments will take effect from the 1st October, 2024.
Merger of trusts under first regime with second regime:
There are two main regimes for trusts or funds or institutions to claim exemption. The first is contained in the provisions of Section 10(23C) (iv), (v), (vi) or (via). The second is contained in the provisions of sections11, 12 and 13 of the Act.
In order to make procedures more simplified, it is proposed that the first regime be sunset and the trusts, funds or institutions be transited to the second regime in a gradual manner.
These amendments will take effect from 1st October, 2024.
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