Major Amendment in Registration Procedure u/s 12A & 80G

[Manish Gupta]

Are you someone who runs a trust or plans to start one? Do you know that the law gives you special rebates under section 12A and 80G? Are you grasping this opportunity, or you wish to, but……..don't know how?

The government introduced specific provisions in the Finance Act, 2020, making it mandatory for charitable/religious/educational institutions/trusts to re-register /re-approval/provisional registration under the sections mentioned earlier. It has been made effective from 1st April 2021 by CBDT vide its notification number 19/2021 dated 26th March 2021.

If you're a proud founder of an NGO, a manager of its funds or a big-hearted donor, here we have come up with all the answers you need for saving your monies and availing the benefits offered to you.

• What is section 12A?

Section 12A of the Income Tax Act, 1961 is the stepping stone for every charitable organisation. It enables non-profit entities such as Charitable Trusts, Non-Profit Organisation, Welfare Societies, Religious Institutions, etc. to claim full tax exemption as per Section 11 and 12 of the Income Tax Act, 1961. It also helps seek grants from governments or organisations abroad, thus holding immense importance in the charity world.

• What is section 80G?

Another significant benefit available for charitable institutions is in section 80G, which allows their donors to deduct the amount of donations made by them from their gross total income. This section increases the volume of assistance, and together, these sections provide significant relief to both trusts and their donors.

• What is the difference between section 12A and 80G?

Section 12A provides tax exemptions to charitable institutions whereas section 80G provides deductions in respect of donations provided to such institutions to the donors of such funds.

• What are the major changes that have taken place as per Finance Bill, 2020?

1. A new section, section 12AB replaces the existing section 12AA.

2. The process of registration and approval of NGO would be made completely electronic.

3. Under this new scheme, the registration would be granted for a period of five years. As a result, registration will have to be renewed every 5 years.

4. Provisional registration would be granted for 3 years to the charitable institutions which are yet to start their activities.

5. NGO’s registered before 1^st April, 2021 would be required to make an application again under new scheme of registration.

• What are the new forms introduced for trusts?

The person who wants to avail of benefit as per section 11 & 12 has to apply in the prescribed standard form, i.e. 10A or 10AB, to the Principal Commissioner to register the trust or institution.

• When would Form 10A be used?

Form 10A would be used for –

1. Already registered/approved cases

Application for revalidation of registration/approval for existing trust registered/approved under Section 12A/12AA/10(23C)/80G.

2. New Cases

Application for provisional registration/approval under section 12AB/10(23C)/80G.

• When would Form 10AB be used?

1. Conversion of provisional registration into regular registration.

2. Renewal of registration/approval after five years.

3. Activating inoperative registration due to approval under section 10(23C)/10(46).

4. Re-registration for modification of objects for entities registered under Section 12AB.

The new registration process can be broadly divided into 3 parts –

1. Re-registration

• Who are liable for re-registration?

All the institutions registered under section 12A or 12AA or having approval under section 10(23C), 35AC or 80G of the Income Tax Act, 1961, have to mandatorily apply for re-registration or re-approval in the amended Form 10A to continue availing benefits of the various section of the law. 

• What is the due date for re-registration?

The registration has to be taken within three months from the first day of April 2021, i.e. up to 30th June 2021.

• How will I have to re-register?

One has to file Form 10A for obtaining registration. One can file this form using the e-filing portal of income tax India.

• What happens once you re-register yourself?

Once the institution gets itself re-registered, The Income Tax Department will produce an electronically generated 'Unique Registration Number' (URN) for your charitable trust/ religious institutions and provide a certificate evidencing its registration.

• Till when will my registration be applicable?

The registration would be applicable for five years.

• How do I register myself under section 80G?

To continue availing the benefit of section 80G, the institutions need to make an application in form 10A separately. Hence, the institutions have to file the same application twice for registering under different sections.

2. Provisional Registration

• How to take registration for a new trust?

Trusts or institutions seeking registration/approval afresh under any of the sections mentioned above, including section 80G, are also required to apply through Form 10A. Such institutions will be granted provisional registration/approval for the tenure of three years. 

• When will I have to apply for afresh registration?

The application shall be filed one month before the commencement of the previous year in which the charitable activity has to be started.

• What is the tenure of Provisional Registration?

The provisional registration/approval shall be applicable for a tenure of three years.

• When will the order granting such registration be passed?

Order granting provisional registration shall be passed within 1 month from the end of the month in which such application is filed.

3. Renewal of Registration

• When to file the application for renewal of registration?

NGOs registered u/s 12AB or approved u/s 10(23C) or Section 80G shall file a fresh application for renewal of registration within 6 months prior to the expiry of 5 years from registration of the NGO.

• What are the conditions for granting approval for renewal of registration?

The Commissioner shall make enquiries for to satisfy himself about the genuineness of activities and compliance of other laws. If he is satisfied, the approval shall be granted for 5 years.

Otherwise, he shall pass an order rejecting the application for renewal of registration and also cancelling its existing registration.

• When will the order granting such registration or rejection be passed?

Order granting such registration shall be passed within 6 months from the end of the month in which such application is made.

The prescribed time limit and the applicable form is discussed below:-

Trust availing exemption under section	Form Applicable	Due date
Registered under section 12A or 12AA before 1st April, 2021	Form 10A	30th June,2021
Having approval under section 10(23C), 35AC or 80G	Form 10A	30th June,2021
Trusts making application for provisional registration/approval	Form 10A	One month before the commencement of the previous year in which the charitable activity has to be started
Having provisional registration under section 12AB	Form 10AB	At least 6 months prior to expiry of period of the provisional registration or within 6 months of commencement of its activities, whichever is earlier
Section 12AB (Renewal of registration/approval after five years)	Form 10AB	At least 6 months before the expiry of the registration period.
Registration has become inoperative due to the first proviso to sub-section (7) of section 11	Form 10AB	At least 6 months prior to the commencement of the assessment year from which the said registration is sought to be made operative
Re-registration for modification of objects for entities registered under Section 12AB	Form 10AB	Within a period of 30 days from the date of the said adoption or modification

Authored by CA Manish Gupta and assisted by Ms. Sanskriti Naruka

For any queries, kindly contact at info@manishanilgupta.com