80G Certificate is given to a non-benefit association or non-legislative associations (NGO), a magnanimous trust or a Section 8 Company by the Income Tax Department. The goal behind the 80G testament is to energize an ever increasing number of contributors to give assets to such associations.

* Donation in real money or check are qualified for the duty derivation.

* All donations are not qualified for tax reductions. Tax reductions can be guaranteed uniquely on explicit gifts for example those made to recommended assets and establishments.

* For asserting reasoning under Section 80G, a receipt gave by the beneficiary trust,called as donee, is an unquestionable requirement. The receipt must contain the name, address and PAN of the Trust, the name of the benefactor, the sum gave.

Some donations meet all requirements for either half or 100% assessment conclusion though some others fit the bill for a similar finding yet up to a most extreme restriction of 10% of Adjusted Gross Total Income of the citizen.

CBDT has extended or deferred the implementation of the new procedure for approval/ registration/ notification of certain entities u/s 10(23C), 12AA, 35 & 80G of the Income Tax Act, 1961 to 1st October 2020 from prescribed June 1, 2020.

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.”

1. Registration Certificate

2. MOA /Trust Deed

3. NOC from the proprietor of the land where the registered office is situated.

4. Copy of the Pan Card of the Trust/Institution.

5. Copy of electricity bill, house tax receipt, or water bill

6. Proof of welfare activities pursued

7. Progress Report since the foundation of the NGO or for the previous 3 years

8. The statement of accounts and balance sheet since the foundation/previous 3 years

9. List of contributors along with their address and PAN.

10. List of governing body of trustees with their contact details

11. Copy of registration granted under section 12AB.

Section 12A (1) a/aa/ab provides new registration of trust where a trust or an institution has granted registration. However, afterward, it has adopted or undertaken alterations of the objects which do not conform to the state of affairs of registration.

The Finance Act of 2020 has released specific new compliance responsibilities on Charitable Trusts and all Exempted Institutions. In this context, the new provisions of the Finance Act, 2020 for Charitable Trusts and exempt institutions, need to re-apply for Income Tax registration as per the Act.

Moreover, Section 12AA, dealing with registration for a charitable institution, will come to an end to applicability from 01.06.2020. In place of this, a new section 12AB has been introduced, suggesting the procedure for new registration.

Requirements of registration under section 12AA or section 12A will become redundant, and new section 12AB will come into force. All the prevailing registered trusts under the preceding section 12A or section 12AA would transfer to the new provision under section 12AB.

Besides, instead of CIT (Exemption) examination, an application is a prerequisite to be made need-fully to the Commissioner or Principal Commissioner of Income-tax.

The Government proposes to create a ‘National Register’ of charitable and religious institutions. Moreover, the Income Tax Department will produce an electronically generated ‘Unique Registration Number’ (URN) to all charitable trust and religious institutions.

The procedure of re-validation of all the charitable trust and religious institutions will qualify/enable the Government to pull out all the dis-functional and out-dated charitable institutions.

Even following the past, many registered trusts are found involved in malpractices for private exploiting and taking out profits rather than doing any unpretentious social work.

The revitalization of registration after every five years will make an opportunity to withdraw the exemptions without going through the complex cancellation provisions. In the year of 2019, the rules interrelated to charitable trusts/NGOs got tightened up to remove the registration even for social abuses under other laws for attaining its objectives.

All the exempted charitable trusts and institutions will now be required to re-apply online for registration or approval, which already has Section 80G certificates, which will be the latest by August 31, 2020. The re-applied registration certificate shall persist and remain valid for the next five years.

The compliance and submission burden on Charitable Trusts and Exempt Institutions goes with few additional parameters to file statements of donation received and matters of donation certificates to donors in line by TDS provisions. In case of failure, heavy fines and penalties are imposed on file such statements.

The benefits of Section 12A Registration are as follows.

* The fund that is used for the charitable or religious purposes is considered to be the income application. The income application is nothing but the expenses used for charitable or religious purposes when calculating the income of the trust.

* The income received will be free from taxation.

* The person registered under this section can avail benefits for accumulating or setting aside income which is not more than 15% for the charitable or religious purposes.

* The accumulation of income, that is considered to be the income application according to Section 11(2) will not be included in the total income.

* The registration that is made under Section 12A, is a one-time registration. Once the registration is made, it will be active till the date of cancellation of the registration. There is no requirement of renewing the registration. Therefore, these benefits can be claimed whenever required by the NGO.

Only Charitable Trusts, Religious Trusts, Societies and companies that come under Section 8 are eligible for 12A registration. 12A registration is not applicable for Private or Family Trust.

Charitable Trusts, Religious Trusts, Societies and Section 8 Companies claiming exemption under Section 11 and 12 of the Income Tax Act, must obtain 12A registration. Private or family trusts are not allowed such exemptions and cannot obtain 12A registration. The process for applying for 12A registration and Form 10A filing has been made online only with the digital signature of the signatory. To obtain 12A Registration, an application in Form 10A for registration of charitable or religious trust or institution must be made online to the Commissioner of Income Tax along with the following documents.

1. Where the trust is created, or the institution is established, under an instrument, self-certified copy of the instrument creating the trust or establishing the institution;

2. Where the trust is created, or the institution is established, otherwise than under an instrument, self-certified copy of the document evidencing the creation of the trust, or establishment of the institution;

3. Self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be;

4. Self-certified copy of the documents evidencing adoption or modification of the objects, if any;

5. Where the trust or institution has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up;

6. Note on the activities of the trust or institution;

7. Self-certified copy of existing order granting registration under section 12A or section 12AA, as the case may be; and

8. Self-certified copy of order of rejection of application for grant of registration under section 12A or section 12AA,as the case may be, if any.

The following documents must be submitted by the 12A registration applicant in Form 10A:

1. Certified copy of the instrument under which the trust/institution was created/established, if applicable

2. Certified copy of the document evidencing the creation of the trust or the establishment of the institution, if applicable

3. Certified copy of registration with RoC/Registrar of Firms & Societies/Registrar of Public Trusts, whichever applicable

4. Certified copy of the documents evidencing adoption or modification of the objects, if any

5. Certified copy of the annual reports of the trust/institution for a maximum three immediately preceding financial years, if applicable

6. Note on activities

7. Certified copy of existing order granting registration under section 12A or section 12AA, if any.

8. Certified copy of order of rejection of application for grant of registration under section 12A or section 12AA, if any.

Once, the application is submitted in the required format online, the Commissioner will request the applicant to submit additional information or documents, as the Commissioner sees fit. The request for additional information or documents would be to satisfy the Commissioner as to the genuineness of the activities of the Trust or Institution.

If the Commissioner is satisfied with the application, then he/she will pass an order in writing registering the Trust or Institution under 12A of the Income Tax Act. In case the Commissioner is not satisfied with the application, then he/she can also pass an order in writing refusing to register the Trust or Institution.

As per the provisions of Section 12AA(2), every order granting or refusing registration, shall be passed by the registering authority before the expiry of six months from the end of the month in which the application was received.

On average, 12A registration take 1 to 3 months in India. However, once a Trust obtains registration, its is valid for the lifetime of the Trust and there is no requirement for renewal.

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