The author proposes several suggestions to streamline the upcoming renewal process for charitable trusts under Sections 12AB and 80G of the Income Tax Act, anticipating a large volume of applications requiring manual processing. To enhance efficiency, they suggest that mandatory trust deed clauses, currently requiring prior amendment, be incorporated directly as binding conditions within the renewal order itself. This would significantly reduce administrative back-and-forth, with non-compliance leading to registration cancellation. Furthermore, the author advocates for “straight-through processing” for trusts with a consistent history of timely filings and accepted returns over the preceding three assessment years, allowing automatic renewal for these compliant entities. The letter also requests that Commissioners be empowered to overlook minor procedural errors, such as incorrect section codes, during application filing, and instead focus on the factual merits of the case to prevent unnecessary litigation. Lastly, clarification is sought regarding the extended ten-year validity period for trusts with income under Rs. 5 crores, specifically whether this applies automatically to existing registrations or only upon their next renewal. Implementing these changes aims to ease compliance for trusts, reduce the administrative load on the Income Tax Department, and foster a more taxpayer-friendly environment. Full Text of the Representation is as follows:
From,
CA. Prasanth Srinivas
Chartered Accountant
Ajantha, Post Box No. 65
Thirunakkara West Kottayam – 686 001 (Kerala)
Ph: 9447125731, E-mail: ssayyarandco@gmail.com
Date: 14.07.2025
To
The Chairman
Central Board of Direct Taxes (CBDT), Ministry of Finance
North Block, New Delhi – 110 001.
Respected Sir/Madam,
Sub: Suggestions for Streamlining the Renewal Process under Section 12AB and 80G for Charitable Trusts & Clarification on Section Codes & Extended Validity Period
I am writing to you today as a concerned professional to offer suggestions aimed at enhancing the ease of compliance and respecting the valuable contributions of taxpayers, specifically in the context of charitable trusts and institutions.
The upcoming renewal window for registrations under Sections 12AB and 80G, scheduled between 30.09.2025 and 31.03.2026, is expected to see a deluge of applications. Number of applications are expected to run in lakhs and all these applications, as the procedure stands now, require manual processing at two levels, namely at Assessing Officer level and at the Commissioner level. This presents a significant administrative challenge for the department and a period of uncertainty for the applicants. In this light, I wish to put forth the following proposals for your kind consideration.
1. Proposal for a More Efficient Renewal Verification Process
A substantial part of the current verification process involves a meticulous check of the trust deed or instrument to ensure it contains certain mandatory clauses. If these clauses are absent, the assessee is required to amend the deed, a process that is both time-consuming and cumbersome for both parties. To alleviate this, I suggest a paradigm shift in the verification methodology:
- Incorporate the Mandatory Clauses as ‘Conditions’ in the Renewal Order:
Instead of insisting on prior amendment of the trust deed, the renewal order under Section 12AB could itself explicitly list the mandatory clauses as binding conditions for the grant of registration. The order could state that the registration is granted on the condition that the trust must adhere to these principles (e.g., irrevocable nature, activities solely for charitable purposes, investment, area of operation, audit, proper dissolution clauses, etc.).
- Consequences of Violation:
The order shall clearly mention that any violation of these inbuilt conditions would be grounds for the cancellation of registration and denial of exemption under the relevant provisions of the Income Tax Act, 1961.
This single change would drastically reduce the back-and-forth between the department and the assessee, saving countless man-hours and ensuring that the core principles of the law are upheld without causing undue hardship.
2. Proposal for “Straight-Through Processing” for Compliant Trusts
In the spirit of trusting the taxpayer, I urge the Board to consider a “straight-through processing” or “green channel” for renewal applications from trusts with an impeccable compliance history.
- Eligibility Criteria:
This expedited process could be made available to trusts that have, for the preceding three assessment years,
(i) filed all requisite forms (e.g., Forms 10/9A, 10B/10BB) on time,
(ii) filed their Income Tax Returns (ITRs) within the due dates, and
(iii) whose returns have been accepted without any additions to the returned income.
- Benefit:
For such cases, the renewal could be granted automatically upon submission of the application. This would reward compliant assessees and allow the department to focus its resources on more complex cases.
3. Proposal to Overlook Minor Procedural Lapses in Application Filing
It has been observed that applications for registration, renewal, or regularisation are sometimes rejected by Commissioners on the grounds that the assessee had chosen an incorrect section code or sub-clause while filing the e-form. Such errors are often inadvertent, stemming from a lack of technical familiarity with the online portal.
Rejecting applications on such minor procedural grounds leads to infructuous litigation and hardship for genuine trusts. Therefore, I request that a clarification be issued, empowering the learned Commissioners to look beyond such minor procedural lapses. They should be permitted to process the application on its facts and merits, provided the assessee is otherwise eligible for the registration sought.
4. Clarification on Extended Validity for Small Trusts
The recent Union Budget announcement extending the validity of Section 12AB registration from five years to ten years for trusts with a total income of less than Rs. 5 crores in last three years is a welcome move. However, there is ambiguity regarding its implementation for existing registered trusts.
Therefore, I kindly request a clarification on the following:
- Does the extended ten-year validity apply automatically to existing trusts that meet the income criteria, effectively extending their current five-year registration period to ten years? Or
- Will this ten-year validity only be granted when these trusts apply for their next renewal?
A timely circular clarifying this matter would provide much-needed certainty to thousands of small and medium-sized charitable organizations across the country.
Conclusion
Implementing these suggestions would be a significant step towards creating a more taxpayer-friendly regime, reducing the administrative burden on the department, and fostering a climate of trust and mutual respect. It would allow both the government and the charitable sector to focus on their core objectives.
I am confident that you will consider these proposals in the positive spirit in which they are intended.
Thank you for your time and consideration.
Yours faithfully,
CA. Prasanth Srinivas
Chartered Accountant
Copy for kind information to:
1. The Honourable Minister of Finance, Government of India, North Block, New Delhi – 110 001.
2. The Honourable Prime Minister of India, Prime Minister’s Office, South Block, New Delhi – 110 011.
3. The President, The Institute of Chartered Accountants of India (ICAI), ICAI Bhawan, Indraprastha Marg, New Delhi – 110 002
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