The Karnataka StateAssociation has made a detailed representation to the Central Board of Direct Taxes seeking urgent administrative intervention to streamline registration and renewal of charitable trusts under Sections 12AB and 80G of the Income-tax Act, 1961. While supporting the objective of ensuring that only genuine charitable institutions receive tax benefits, the Association highlighted serious procedural and systemic issues, including massive pendency of applications, manpower shortages, repeated and mechanical notices, hyper-technical rejections, and erosion of institutional confidence. It flagged concerns about lack of transparency, discretionary practices, overly expansive scope of enquiry into non-tax compliances, and inconsistent outcomes leading to avoidable litigation. The representation warned that prolonged delays and procedural rigidity are harming bona fide charities and public115TD welfare. It urged the Board to adopt faceless processing, strengthen administrative capacity, introduce risk-based scrutiny, provide rectification mechanisms, extend the 10-year registration benefit to renewal cases, and issue clear guidance to restore fairness, transparency, and confidence in the charitable registration framework.
KARNATAKA STATE
CHARTERED ACCOUNTANTS ASSOCIATION (R)
CA. Shivaprakash Viraktamath, President
CA. Siddartha S Javali, Secretary
To,
Shri Ravi Agarwal,
The Chairman,
Central Board of Direct Taxes (CBDT),
New Delhi.
Ref No: 005/2025-26 Date: 07 January 2026
Respected Sir,
Subject: Representation seeking urgent administrative intervention to streamline registration and renewal proceedings under Sections 12AB and 80G of the Income-tax Act, 1961
The Karnataka State Chartered Accountants Association (R) (KSCAA), established in 1957, is a premier professional organization representing Chartered Accountants in Karnataka. Over the years, KSCAA has played an active role in engaging with the Income Tax Department, the Central Board of Direct Taxes (CBDT), and other stakeholders through workshops, seminars, policy discussions, and formal representations. These efforts are aimed at promoting efficient tax administration, ensuring compliance, and fostering transparency and accountability within the tax system. By bridging the gap between taxpayers and policymakers, KSCAA contributes to the creation of a practical, effective, and resilient tax framework. KSCAA remains a vital link between taxpayers and policymakers, playing a key role in shaping a transparent, efficient, and practical tax environment.
At the outset, we acknowledge and appreciate the legislative intent behind the registration framework governing charitable institutions, which seeks to ensure that only genuine organisations engaged in bona fide charitable activities enjoy the statutory benefits under the Act. However, the manner in which these provisions are presently being administered has resulted in widespread hardship to genuine institutions, leading to prolonged delays, procedural uncertainty, and compliance burdens that are disproportionate to the objectives sought to be achieved. In several cases, the implementation appears to have shifted from facilitative verification to excessive procedural scrutiny, thereby diluting the spirit of the law and undermining confidence in the registration process. This divergence between legislative intent and administrative execution has adversely affected the functioning of bona fide charitable institutions and disrupted charitable activities carried out in the public interest.
I. MAJOR ISSUES
While we support the objectives of the registration and renewal framework for trusts, we wish to draw your kind attention to the significant procedural, administrative, and systemic issues being faced by charitable trusts during these processes. They also risk undermining public confidence in the regulatory framework, diverting scarce resources from charitable activities, and creating unintended barriers to compliance. These challenges are causing undue anxiety, operational difficulties, and delays for genuine institutions. We highlight the specific concerns below.
1. Pendency of Applications and Statutory Timelines:
It is respectfully submitted that a substantial number of applications relating to registration and renewal under Sections 12AB and 80G remain pending. As per available information, more than 17,000 applications are currently awaiting disposal in Karnataka alone, all of which are required to be completed on or before 31 March 2026, in accordance with statutory timelines. Considering the volume of pending matters, there appears to be a significant constraint on manpower and administrative capacity at the level of the Commissioner of Income Tax (Exemptions). Long queues for hearings and limited hearing bandwidth are commonly observed, and officers are required to handle a very large number of applications within compressed timelines. This structural overload has resulted in delayed responses, repeated and unnecessary requisitions, and procedural bottlenecks, which risk creating unnecessary hardship for genuine charitable institutions and could undermine the statutory objective of ensuring timely and fair processing of applications.
2. Concerns Regarding Transparency, Institutional Confidence, and Systemic Corruption
It has come to the notice of stakeholders, through consistent field level feedback and informal interactions, that there is growing apprehension and lack of confidence among charitable institutions and professionals regarding the registration and renewal process under Sections 12AB and 80G. While no specific instance is being alleged through this representation, the existence of such perceptions, particularly relating to delays, discretionary practices, and lack of clarity, can be detrimental to institutional credibility and public trust. It is respectfully submitted that even the perception of undue influence, opaque procedures, or non transparent practices, if left unaddressed, may discourage genuine charitable activity and erode confidence in the administration of the law.
Applicants are frequently subjected to unexplained delays, repeated and unnecessary requisitions, mechanical notices, and summary rejections on hyper technical grounds, none of which bear a reasonable nexus to the statutory objective of examining the genuineness of charitable activities. Such practices have fostered an environment where it is widely believed that the progress or resolution of applications occurs only through extraneous or unofficial considerations.
Even in the absence of explicit demands, the structure and conduct of proceedings themselves create coercive pressure on applicants, particularly small, rural, and first-time charitable institutions, who are left with the impression that compliance with statutory requirements alone may not suffice. The cumulative effect of prolonged pendency, discretionary procedural hurdles, and absence of transparent reasoning has severely undermined confidence in the integrity of the registration process.
The existence of such an environment is deeply damaging to institutional credibility. It erodes public trust in tax administration, discourages genuine charitable activity, and diverts scarce charitable resources towards repeated personal appearances, compliance costs, and litigation rather than public welfare. If left unaddressed, these systemic issues risk normalising informal practices, which is wholly inconsistent with the principles of fairness, transparency, and good governance expected of public authorities.
II. OTHER ISSUES
1. Procedural Deficiencies in Notice Issuance
Notices are frequently issued seeking information and documents already available on record, including those uploaded with Form 10AB, indicating inadequate application of mind. More concerning are instances where applications are rejected without examination on merits, leading to severe consequences such as cancellation of registration under Section 12AB and potential taxation of accreted income under Section , leaving affected trusts with no effective remedy other than prolonged litigation.
2. Need for Manpower Augmentation and Jurisdiction Rationalisation:
Given the impending statutory deadline, it is respectfully submitted that timely augmentation of manpower is not merely an administrative convenience but a necessity to prevent systemic stress and avoid unintended adverse outcomes. Uneven distribution of cases across jurisdictions has led to avoidable disparities in timelines and outcomes, thereby affecting uniformity and predictability in the registration process
3. Scope of Enquiry under Sections 12AB and 80G
The provisions of Section 12AB, particularly those relating to verification of compliance with other applicable laws “as are material for the purpose of achieving its objects”, are being interpreted in an extremely rigid and expansive manner.
It is observed that, in several cases, applicants are required to provide information relating to matters such as hostel registrations, pollution control certificates, building stability certificates, and similar approvals. While such compliances may be relevant under other regulatory frameworks, it is respectfully submitted that the scope of enquiry under Sections 12AB and 80G is intended to be confined to verification of charitable objects, genuineness of activities, and proper application of income. Compliance with other statutory or local laws is already monitored by the respective competent authorities empowered under those enactments. Duplication of such oversight through the registration process under the Income-tax Act may inadvertently expand the scope of enquiry beyond what is statutorily envisaged.
4. Risk of Inconsistent Outcomes and Avoidable Litigation
In the absence of standardised guidelines and considering the current volume of applications, there is a risk of inconsistent approaches and outcomes across cases. Such inconsistency creates uncertainty for charitable institutions and results in avoidable litigation, thereby diverting both departmental resources and charitable funds away from their intended welfare purposes.
5. Applicability of Proviso to Section 12AB(1) to Existing Renewal Cycles
A proviso was added to Section 12AB(1) vide Finance Act, 2025 w.e.f. 01-04-2025, providing for an extended period of registration of 10 years on satisfaction of certain conditions. This relaxation/benefit is currently being applied only to new trusts applying for fresh registration.
It is submitted that a clarification may be issued to extend the benefit of this proviso to trusts already in the renewal cycle since the amendment has been made prior to the due date for filing applications with respect to renewals
6. Need for Procedural Safeguards and Rectification Mechanism
Introduction of a limited rectification or condonation window for curing procedural defects. such as incorrect section selection, inadvertent omissions, or delayed uploads and would substantially reduce irreversible prejudice to genuine charitable institutions and prevent unnecessary appellate proceedings.
7. Larger Public Interest Considerations
Charitable organisations have historically played a vital role in social welfare, particularly during periods such as the COVID-19 pandemic, and continue to function as a significant contributor to employment and grassroots-level development. Any denial or prolonged delay in registration, especially for smaller or emerging institutions, can have a cascading effect on the communities they serve.
III. PRAYER
In light of the above, and to ensure that the registration and renewal process for charitable trusts is fair, transparent, and aligned with statutory intent, we respectfully urge the Board to consider the volume of pending applications, the statutory deadline of 31 March 2026, and the importance of the charitable sector, this matter warrants urgent administrative attention and policy-level guidance. Timely intervention at this stage would ensure that the objectives of the charitable registration framework are achieved in a fair, efficient, and conducive environment, while also enabling the Department to discharge its statutory responsibilities smoothly. We respectfully request the Board to consider the following measures:
1. To ensure transparency, uniformity, and elimination of discretion-driven inconsistencies, it is strongly recommended that the registration and renewal process under Section 12AB/80G be made completely faceless, similar to other major functions under the Act.
2. It is respectfully submitted that urgent administrative safeguards, effective supervisory oversight, and clear internal instructions are required to decisively address systemic corruption, thereby restoring confidence among stakeholders, and ensure that the administration of Sections 12AB and 80G remains transparent, objective, and beyond reproach.
3. Strengthening the number of Commissioners and supporting staff, or rational redistributing jurisdiction based on pendency and geographic spread, would significantly facilitate fair and timely disposal of applications would also reduce the risk of applications being adversely impacted on procedural or technical grounds due to workload constraints.
4. It is respectfully submitted that applications under Section 12AB be examined primarily on the basis of documents filed with Form 10AB, and that further notices be issued only where specific clarifications are required. It is also recommended that a suitable window be provided for reconsideration of applications rejected solely on account of nonappearance, so that such cases may be decided on merits.
5. On the lines of provisional registration, it is suggested that renewal of registration be made automatic, subject to basic validations, and that only select cases be taken up for detailed verification based on risk parameters. A risk-based, selective scrutiny model would achieve the Department’s objectives more efficiently while reducing unnecessary compliance friction.
6. It is submitted that the benefit of the proviso to Section 12AB(1) be extended, by way of clarification, to trusts already in the renewal cycle, given that the amendment was effective prior to the relevant due dates.
We are confident that the Board will recognise the practical difficulties arising from the current approach and take appropriate measures to address these challenges, thereby ensuring a fair, transparent, and efficient registration and renewal process that upholds the statutory intent and fosters confidence among bona fide charitable trusts.
Yours sincerely,
For Karnataka State Chartered Accountants Association ®
| CA Shivaprakash Viraktamath
President |
CA Siddartha S Javali
Secretary |
CA Babitha G Chairperson,
Representation Committee |
CC:
1. Nirmala Sitharaman, Hon’ble Union Minister of Finance and Corporate Affairs, Government of India
2. Shri Pankaj Chaudhary, Union Minister of State for Finance
3. Shri Arvind Shrivastava, Hon’ble Revenue Secretary
4. Preeti Garg, PCCIT, Karnataka and Goa
5. Sunita Puri, Chief Commissioner of Income tax (Exemption), New Delhi
Author Bio
Well drafted representation. Hope that the Government tackles the issue positively at the earliest.