New Section 12AB: Re-Registration of Trusts / Institutions registered u/s 10(23C) / 12A / 12AA / 80G of Income Tax Act

[By Shaleen Shah (Partner), VNCA]

All the existing charitable and religious institutions (including NGOs) which are registered or approved under section 12A, section 12AA, section 10(23C) & section 80G are compulsorily required to switch to section 12AB for fresh registration in order to continue availing exemption under section 10 or 11, as the case may be.

The CBDT (Central Board of Direct Tax) has issued Notification No. 19/2021 dated 26.03.2021 prescribing the procedure for Registration including re-approval/revalidation of existing Tax Exemption Registrations of Trust or Institutions.

The new Rules and Forms will be applicable from 1^st April 2021 and all charitable Trusts and Institutions already registered u/s 12A or 12AA or 10(23C) and having 80G certificate must apply for re-approval/revalidation of their registration before 30^th June 2021.  Considering the working restrictions due to the current covid situation across the country, this date is most likely to be extended further.

Form No. 10A is prescribed for application for re-registration. It is an online process.

The following documents (self-certified) are required to be submitted along with the application:

1. Trust Deed / Memorandum and Article of Association
2. PAN Card of Trust / Institution
3. Registration Certificate or Certificate of Incorporation (issued by charity commissioner, registrar of societies or registrar of companies)
4. Utility Bill Copy e.g. Electricity Bill, Property Tax, etc. and NOC copy from the Landlord in case of rented property
5. FCRA Registration Certificate, if registered
6. Existing Registration Certificate u/s 12A / 12AA
7. Existing Registration Certificate u/s 80G
8. Audited Accounts along with Acknowledgement of Return of Income and Computation of total income for last 3 years
9. Note on the Activity of Trust / Institution – welfare activity carried out and progress report of the same for the last 2 years
10. If registered on DARPAN Portal, then details of such registration
11. Following details of all authors/ settlors/ trustees/ Members of Governing Council/ Members of societies/ Shareholders holding not less than 5% shares:  • Name • Address • Aadhaar • PAN • Mobile • Email ID

On receipt of application in Form No. 10A, the PCIT or CIT shall process the application within the prescribed time limit.  Order granting registration shall be granted in writing in Form No. 10AC. A 16-digit alphanumeric Unique Registration Number (URN) shall be allotted on successful re-registration.  This registration will be valid for 5 years after which re-approval/revalidation process will have to be repeated.

There is a known complication in cases where a charitable Trust or Institution has simultaneous registration u/s 12A/12AA and 10(23C).

Furnishing of the statement u/s. 80G

From FY 2021-22, every trust / institution registered u/s 80G shall have to furnish statement of donations based on which the deduction will be available to the donors. The details of donations must be furnished in Form No. 10BD annually, on or before 31^st May of the subsequent financial year (e.g. the statement for FY 2021-22 will have to be furnished on or before 31.05.2022.)

Following information will be required to furnish the statement (Form 10BD):

1. PAN / Aadhaar Number of the donor
2. If PAN / Aadhaar is not available, then either the Passport No./ Elector’s photo identity/ Driving License/ Tax Payer identification Number for the donor’s place of residence
3. Type of donation i.e. Corpus/ Specific Grant/ Others
4. Amount of donation
5. Mode of receipt – Cash/ Cheque/ Electronic modes/ In-kind
6. The certificate in Form No. 10BE to be given to the donor will be available for download from the website of the Income tax Department after furnishing of Form 10BD

It is important to maintain complete record of all donors as above from 01.4.2021.