Major Income Tax Proposals for Charitable Trusts & Institutions: Budget 2020

Significant Income Tax Proposals In Finance Bill, 2020 For Charitable Trusts and Institutions

– The process of approval and registration of trusts, institutions, funds, university, hospital etc. proposed to be rationalised with effect from 1.6.2020. Now, the approval or registration or notification for exemption will be valid for a period not exceeding five years at one time; and the trust/institution etc. has to apply again before the concerned authorities for new registration before expiry of the period of exemption. This will be applicable for both existing and newly exempt entities u/s 10(23C)/12AA/35.

– An entity approved, registered or notified under section 10(23C), section 12AA or section 35, as the case may be, shall be required to apply for approval or registration or intimate regarding it being approved, as the case may be, and on doing so, the approval, registration or notification in respect of the entity shall be valid for a period not exceeding five previous years at one time.

– An entity already approved under section 80G shall also be required to apply for approval and on doing so, the approval, registration or notification in respect of the entity shall be valid for a period not exceeding five years at one time.

– An entity making fresh application for approval under section 10(23C), for registration under section 12AB or for approval under section 80G shall be provisionally approved or registered for three years on the basis of application without detailed enquiry even in the cases where activities of the entity are yet to begin; and then, it has to apply again for approval or registration which, if granted, shall be valid from the date of such provisional registration.

– Such exempt entities would now be required to furnish a statement of donation received and issue a certificate to the donor so that the deduction claimed by the donor in its tax return can be pre filled.

– Deduction under section 80G/80GGA to a donor shall be allowed only if a statement is furnished by the donee. A fee of Rs.200 per day shall be levied in case of failure subject to maximum of amount in respect of which the failure occurred.

– Permissible cash donation to scientific research or rural development for claiming deduction under section 80GGA is proposed to be reduced from Rs. 10,000 to Rs.2,000.