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12AB Registration

12AB REGISTRATION

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    OVERVIEW OF 12AB REGISTRATION

    The Finance Act, 2020 has made alterations regarding the provisions related to Trusts and NGOs holding exemption under section 11 or 12 of the Income Tax Act, 1961. Few major amendments in the Finance Act are as follows:-

    • Registration procedure of all the existing registered trusts under section 12AB,
    • Approval for deduction u/s 80G
    • Renewal of registration,
    • Preparing the statement of donations received to the Income Tax Authorities
    • As per the amendment, for continue availing exemption under section 10 or section 11, all the existing charitable institutions registered under the following Sections 12A, Section 12AA, Section 80G are compulsorily required to change to section 12AB for fresh registration with the time duration of 3 months which is 30th June 2021.

    In the case of new Trusts or Institutions, they will have to apply for registration under section 12AB of the Income Tax Act, 1961.

    DOCUMENTS REQUIRED FOR 12AB REGISTRATION

    PAN
    PAN

    Copy of PAN Card of Trust /Institution.

    Entity’s documents
    Entity’s documents

    • Certificate of Incorporation and MOA(in case of company).
    • Trust deed (2 copies attested my managing trustee).

    Address Proof
    Address Proof

    • NOC from the Landlord (in case of rented).
    • Electricity Bill, Water Bill, Property tax receipt (in case of owned).

    Welfare Activity Proof
    Welfare Activity Proof

    • Proof of welfare activity+ progress report (last 2 years).
    • Books of Accounts+ Balance Sheet+ Income Tax return(last 3 years or since inception).

    Particular of Donors & governing Bodies
    Particular of Donors & governing Bodies

    • Particulars of Donors with their Id and Address Proof.
    • Particulars of Governing body or members of the trust/ Institution.

    PROCEDURE OF SECTION 12AB REGISTRATION

    All charitable trusts, societies, NGO except private or family trusts, are eligible to register under Section 12AB.

    1

    An application in Form 10A filed with the Income Tax Commissioner.

    2

    The submission of required documents.

    3

    After submission of documents, Commissioner will review the application, who may also ask for additional information, if required. An order granting approval or rejection shall be given within 3 months.

    4

    Commissioner finds application to be satisfactory, soon after the registration to be completed, In case of rejection the authority will provide a reasonable opportunity of being heard before cancelling the registration.

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    Frequently ASKED Questions

    What are the major new amendment under 12AB Registration?

    As per the Finance Act, 2020 few major amendments in the Finance Act are as follows:-

    • Registration procedure of all the existing registered trusts under section 12AB,
    • Approval for deduction u/s 80G
    • Renewal of registration,
    • Preparing the statement of donations received to the Income Tax Authorities
    • For continue availing exemption fresh registration with the time duration of 3 months which is 30th June 2021.
    • In the case of new Trusts or Institutions, they will have to apply for registration under section 12AB of the Income Tax Act, 1961.

    What are the advantages of 12AB Registration?

    The advantages of 12AB Registration are mentioned below:-

    • Electronic Database – Due to proper electronic filing and providing Electronic Database section 12AB helped the in data management of this trust and institutions.
    • Remove Odds From Old Trusts – Section 12AB remove Odds From Old Trusts as the old section have misplaced their registration number, nor the Income Tax Department have any records of it. By introduction of Section 12AB, the work will be done electronically.
    • Avoiding Difficulty Via Various Facilities – Due to non-commencement of any activities, the newly formed Trusts were facing difficulties, thus Section 12AB has providing various facilities removing that the difficulties of the New trust.

    Who are Eligible criteria to take Registration under 12AB of the Income Tax Act?

    To taking continued exemption under section 10 or section 11, all the new and existing charitable & religious institutions (including NGOs) which are registered under the following section are compulsorily required to move to section 12AB for fresh registration, which are as follows:-

    • Section 12A
    • Section 12AA
    • Section 80G
    • Section 10(23C)

    Also, Section 12AA, Section 80G are compulsorily required to change to section 12AB for fresh registration with the time duration of 3 months which is 30th June 2021 and a new section 12AB will come into force with effect from whichever is earlier:-

    • The date of grant of registration under section 12AB or,
    • The last date by which approval is required to be made for the registration application.

    What is the Validity period of Registration granted under Section 12AB?

    The validity period of registration granted under section 12AB is for 5 years. In the case of Provisional registration validity period is 3 years. All the registration which are granted under section 12AB shall be renewed as according to the new scheme of registration.

    Is it compulsory for the trust to get registration under section 12AB?

    Yes, As per the latest amendment in Income Tax Act, 1961, In order to claim an exemption under section 11, a trust must get itself registration under section 12AB.

    What is meant by Provisional Registration?

    Provisional registration refers to the registration for granting income tax exemption to newly formed entity with the object to carry out charitable activities. Provisional registration is granted for the period of 3 years without conducting any detailed inquiry by the IT department and even if the entity has not commenced its activities.

    Whether trust/charitable institution registering under section 12AB is issued same registration number as issued to the charitable before?

    No, as per the new provisions of the IT act, a Unique Registration Number is be allotted to the trust /charitable institution. This implies that the previous registration number shall be void after 01.04.2021.

    Why there is requirement for all the charitable trust needs to get register under Income Tax under Section 12AB?

    As per the Finance Bill 2020, It is required for all the charitable trust to avoid the discrepancies that occurred had in the old trust registration process. This is done to consolidate all trust data at an electronic database.

    Who are all eligible for 12AB Registration?

    Following are the eligible institution under section 12AB Registration –

    • All the existing charitable and religious institutions including NGOs which wants to continue taking exemption under section 10 or section 11 are mandatorily required to move to section 12AB for fresh registration
    • All the existing charitable and religious institutions including NGOs which are registered under the following section-
      • Section 12A
      • Section 12AA
      • Section 10(23C)
      • Section 80G

    What is the period of validity for Provisional Registration?

    Period of validity for Provisional Registration is for 3 years.

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