Income Tax

CBDT has extended the implementation of the new procedure for re-registration of Charitable Institutions u/s 10(23C), 12AA, 35 & 80G of the Income Tax Act, 1961 to 1st October 2020

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Finance Act, 2020 has unleashed certain new compliance burdens on Charitable Trusts and Exempt Institutions. Budget 2020 has amended certain provisions of the Income Tax Act, 1961 having a great impact on the functioning of the registered Charitable Trusts and NGOs. These charitable trusts and NGOs have been burdened with the renewal of existing registration, setting an expiry date for registration, filing of statements of donation receipts, and other formalities.

All the existing charitable and religious institutions (including NGOs) which are registered or approved under the following sections-

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

are compulsorily required to switch to section 12AB for fresh registration.

Currently, several hospitals, schools and colleges are registered simultaneously under section 10(23C) and 12AA. Charitable trusts and intuitions currently registered under both section 10(23C) and section 12AA will now be required to apply for revalidation or renewal of either the approval under section 10(23C) or registration under section 12AA, but not both.

Charitable trusts and exempt institution which are already registered under section 12A or section 12AA of Income Tax Act, 1961 will now be required to reapply online for registration and approval by August 31, 2020. Provisions of registration under section 12AA or section 12A will become redundant from 01st June 2020 and a new section 12AB will come into force with effect from 01st June 2020. All the existing registered trusts under the erstwhile section 12A or section 12AA would move to new provision section 12AB.

Similarly, charitable trusts and exempt institutions which already have Section 80G certificate will now be required to reapply online for registration or approval by August 31, 2020. The registration shall remain valid for 5 years.

These new compliances are about to begin from June 1, 2020. Hence seeing the present situation, the CBDT has decided to give relief to the charitable societies.

In a tweet on 8th May, 2020, the income tax department says,”In view of the unprecedented economic crisis emanating due to the COVID-19 situation, CBDT has deferred the implementation of new procedure for approval/registration/notification of certain entities u/s 10(23C),12AA, 35 & 80G of IT Act,1961 to 1st October 2020.”

The new compliances under the mentioned section were made applicable from June 1, 2020 and should have been completed by August 31, 2020.

From the released information by way of tweet, the new date of compliances shall begin on October 1, 2020 and shall continue till December 31, 2020.

In this pandemic situation, it is the NGOs and other Charitable trusts which are playing an active role in the society and their contributions cannot be ignored right now. It is, therefore, of utmost importance to allow them to remain focussed in social activities rather than in compliances.

Please note that this information is shared by the Income Tax department by tweet only which is not a law. Hence, to have a legal effect of the time extension or deferment, a notification from the CBDT is required which may be expected soon.