Step by Step Procedure for Registration u/s 12A of Income Tax Act 1961

After sharing the last two articles ‘Concept of NGO and Income Tax Provisions‘ and ‘Benefits of Registration u/s 12A of the Income Tax Act’ 1961’ I have received many queries regarding procedure for registration u/s 12A. In this article, we are solely discussing Procedure for Registration u/s 12A of the Income Tax Act’ 1961.

Trust, Society and Section 8 Company can seek registration u/s 12A to claim exemption under Income Tax Act’ 1961, if certain conditions are satisfied. Section 12A deals with registration of trust and section 12AA deals with procedure for registration of trust.

If the NGO does not get itself registered u/s 12A, it will not be eligible to claim ‘Benefits of Registration u/s 12A of the Income Tax Act’1961’. Once the registration is granted, it will hold good till the cancellation of registration.

Step by Step Procedure for Registration u/s 12A

Application for 12A registration is made in Form 10A. It is prescribed in Rule 17A of the income tax rules’ 1962. Below is the step by step procedure for applying Section 12A registration:

a) To whom application for registration u/s 12A is to be made?  

The application for registration has to be filed with the jurisdictional Principal Commissioner or commissioner of Income Tax (exemptions).

b) Documents to be furnished alongwith Form 10A for registration u/s 12A

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.

Note:

1. Form No. 10A shall be furnished electronically:

(i) under digital signature, if the return of income is required to be furnished under digital signature;

(ii) through electronic verification code in a case not covered under clause (i)

2. Form No. 10A shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the assessee.

c) Procedure for registration u/s 12A

Section 12AA of the Income Tax Act’ 1961 prescribes procedure for registration of Trusts or institution as follows:

1. The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution shall

(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about

(i) the genuineness of activities of the trust or institution; and

(ii) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects

and may also make such inquiries as he may deem necessary in this behalf

2. After satisfying himself about the objects of the trust or institution and the genuineness of its activities and compliance of the requirements he

(i) shall pass an order in writing registering the trust or institution

(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution

and a copy of such order shall be sent to the applicant

Please note that no order shall be passed unless the applicant has been given a reasonable opportunity of being heard.

d) Deemed Registration u/s 12A

As per Section 12AA(2) Every order granting or refusing registration shall be passed before the expiry of six months from the end of the month in which the application was received.

The Supreme Court on February 16’2016 held in the case of:

CIT vs. Society for The Promotion of Education, Adventure Sport & Conservation of Environment

“S. 12AA: Non-disposal of an application for registration before the expiry of six months as provided u/s 12AA (2) results in deemed grant of registration”

CBDT Instruction:.

The CBDT has issued Instruction No. 16 of 2015 dated 06.11.2015 in which it has taken a stern view of the fact that the time limit of six months specified in s. 12AA(2) of the Income-tax Act 1961 for passing an order granting or refusing registration under s. 12AA are not being adhered to by the Commissioners of Income Tax (Exemptions). The CBDT has directed the Chief Commissioners to monitor that the Commissioners are adhering to the time limit and to take suitable administrative action in the case of laxity.

e) Cancellation of Registration granted u/s 12A

I. Registration granted u/s 12A can be cancelled in below circumstances:

II. The activities of such trust or institution are not genuine.

III. The activities are not being carried out in accordance with the objects of the trust or institution.

III. Trust’s income does not endure for the benefit of general public.

IV. It is for the benefit of any particular religious community or caste.

V. Any income or property of trust is applied for the benefit of specified persons like author of trust, trustees etc.

VI. Its funds are invested in prohibited modes.

“It is however provided that registration will not be cancelled if the trust institution proves that there was reasonable cause for carrying out activities in said manner.”

Important Note: 

Amendment by Finance Act’ 2017

Following clause (ab) shall be inserted after clause (aa) of sub-section (1) of section 12A by the Finance Act, 2017, w.e.f. 1-4-2018:

“the person in receipt of the income has made an application for registration of the trust or institution, in a case where a trust or an institution has been granted registration under section 12AA or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)], and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, in the prescribed form and manner, within a period of thirty days from the date of said adoption or modification, to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA”

It means where a trust or an institution has been granted registration and subsequently it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, it shall be required to obtain fresh registration by making an application within a period of thirty days from the date of such adoption or modifications of the objects in the prescribed form and manner.

ANNEXURE: 1 {SOURCE: INCOME-TAX RULES, 1962}

FORM NO. 10A

[See rule 17A]

Application for registration of charitable or religious trust or institution under clause (aa) of sub-section (1) of section 12A of the Income-tax Act, 1961

To

The Commissioner of Income-tax,

Sir,

I, ————————- on behalf of ——————————[name of the trust or institution] hereby apply for the registration of the said trust/institution under section 12A of the Income-tax Act, 1961. The following particulars are furnished herewith:

1. Name of the * trust/institution in full [in block letters]

2. Permanent Account Number

3. Address

4. Details of the author(s)/founder(s): —

5. Date of creation of the trust or establishment of the institution

6. Details of the trustee(s)/manager(s): —

I also enclose the following documents:

1. (a) * Original/Certified copy of the instrument under which the trust/institution was created/established, together with a copy thereof.

(b) * Original/Certified copy of document evidencing the creation of the trust or the establishment of the institution, together with a copy thereof. [The originals, if enclosed, will be returned].

2. Two copies of the accounts of the * trust/institution for the latest * one/two/three years.

I undertake to communicate forthwith any alteration in the terms of the trust, or in the rules governing the institution, made at any time hereafter.

Date

Signature

Designation

Address

*Strike out whichever is not applicable

(Submitted by – Tarun Kumar (B.Com, ACA) Mobile: +91-888-282-8112- Email-ID: [email protected])

(Republished with Amendments)