The Central Board of Direct Taxes (CBDT) has issued “Draft Rules” to amend Rule 17A & Form 10A of Income Tax Rules, 1961 relating to the registration of religious & charitable trusts as proposed in the Finance Act of 2017.

The Department has given time up to 27th October for stakeholders to give their comments on the proposed amendments.

Proposed Amendments – In Brief

Provisions at present Proposed Provisions

Application for registration of charitable or religious trusts, etc.

Rule 17A.

An application for registration of charitable or religious trusts, shall be made in Form No. 10A & shall be accompanied by following documents:

1. Original copy of Trust Deed or Instrument, with one copy thereof. The commissioner may accept the certified true copy of Trust Deed or Instrument in lieu of Original copy

2. Document evidencing the creation of the Trust where the Trust is created, otherwise than under an instrument or Trust Deed, with one copy thereof.

3. Where the Trust has been in existence during for any year or years, prior to the financial year in which the application for registration is made, 2 copies of the accounts of the trust relating to such prior year or years (but not more than 3 years immediately preceding the year).

 

Application for registration of charitable or religious trusts, etc.

Rule 17A

An application for registration of charitable or religious trusts, shall be made in Form No. 10A & shall be accompanied by following documents:

1. Self-certified copy of Trust Deed or Instrument, where the trust is created under an instrument.

2. Self- certified copy of the document evidencing the creation of the trust, where the trust is created, otherwise than under an instrument.

3. Self-certified copy of registration with Registrar of Companies (RoC) or Registrar of Firms and Societies or Registrar of Public Trusts.

4. Self-certified copy of the documents evidencing adoption or modification of the objects, if any;

5. Where the trust has been in existence for 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 trust relating to such prior year or years (but not more than 3 years immediately preceding the year).

6. Note on the activities of the trust or institution.

7. Self-certified copy of the existing order granting registration under section 12A or section 12AA, if any.

8. Self-certified copy of the order of rejection of an application for grant of registration under section 12A or section 12AA, if any.

Section 12A (1) (ab) – In Brief *

Where a trust or an institution, which has been granted registration under sections 12A or 12AA of the Act has subsequently adopted or undertaken modification of the objects and such modification does not conform to the conditions of such registration, then such trust or institution shall be required to obtain registration again by making an application within a period of thirty days from the date of such adoption or modification of the objects.

In other words, the Department is empowered to cancel the registration of Tax-Exempt Religious & Charitable Trusts, if it is convinced that these Trusts or Institutions are not meeting the conditions.

Earlier Position or before Finance Act 2017

There was no onus on Religious Trusts or Institutions to report “Adoption or Modification of the Objects.”

To plug the hole, the finance ministry has brought an amendment in Income Tax Act, 1961 through Finance Act 2017.

Submission of Form No 10A for Registration

Duly filled Form No. 10A shall be furnished to the Principal Commissioner or Commissioner, electronically, electronically, by using a Digital signature or through Electronic Verification Code (EVC).

Verification of Form No. 10A

The Form shall be verified by the person who is authorized to verify the return of income under Section 140 of the Income Tax Act, 1961 as applicable to the assessee.

* W.e.f 1st April 2018

The Author is a budding Tax Law Professional and can be reached at shreetaxchambers@bsnl.in

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