1. All the existing charitable Trust, Society and Section-8 Company or institutions registered/approved on and after 01-04-2016 u/s 12A, 12AA,10 (23C),80 G need not apply for renewal immediately. They have to calculate the period of registration and are required to apply 6 months before the end of 5 years from the date of registration/approval.
2. 2. All the existing charitable Trust, Society and Section-8 Company or institutions registered:
   
   • Under the sections 12A & 12AA need to be re-registered under the new section 12AB as and when due.
   • Under section 10 (23C) need to apply again for fresh approval as and when due
   • Under section 80 G needs to apply again for fresh approval as and when due
3. The registration will be granted for a period of 5 years.
4. Application has to be made in Form-10A for the purpose of Section 12AB.
5. Provisional registration will be valid for maximum period of three years.
6. On Commencement of Activities: Application has to be made for converting provisional to final registration in Form-10AB for the purpose of section 12AB.
7. Documents required for registration are-
   • 12A, 12AA,10 (23C),80G Certificate,
   • Darpan Unique ID
   • FCRA Registration Certificate, if any.
   • Copy of Trust Deed or Bye Laws, MOA etc
   • Copy of PAN of Organization

   • PAN, AADHAR, Mobile No. & e-mail ID of members/trustee/Directors
   • Rent Agreement & Electricity Bill
   • Audited financial Statements and ITR for last 3 years, if any
   • Annual/Activity Report for last 3 years, if any
   • Digital Signature of Authorized Person
8. If application is not made, existing Registration/Approval will lapse.

Form for application under section 12AB of Income Tax Act shall be made online by Filing Form 10A along with the required documents to the Commissioner or Principle Commissioner who shall pass an order granting approval or rejection within three months from date of commencement of new provisions, i.e., by 30th June 2021.

Section 12AB of Income Tax Act- From 1st April 2021, the new provisions will come into effect, as a result of which every trust or institution which are already in existence will have to mandatory renew the certificate granted under section 12A, 12AA, 80G, or section 35 with the time limit of 3 months which is 30th June 2021 and In the case of new Trusts or Institutions, they will have to apply for registration under section 12AB of the Income Tax Act, 1961.

Further, in case where Commissioner or Principle Commissioner is satisfied that the charitable/religious trusts institution etc. have not complied with the objects mentioned or any other law, shall cancel the registration of charitable/religious trusts institution etc. after providing the reasonable opportunity of being heard.

The application can be made by filing form 10A online on the income tax site incometaxindiaefiling.gov.in
The form is available on the income tax website under Income Tax Forms Section under e-file menu which is visible after login on the website.

Contents required to be furnished in Form 10A:-

1. Name of the Trust, Society or Institution.
2. PAN details of the Trust, Society or Institution.
3. Registered Address of the Trust, Society or Institution.
4. Select the type of Trust:- Religious/ Charitable/ Religious-cum-Charitable
5. E-Mail and Mobile number of the Managing Trustee/Chairman/Managing Director/Any authorized person by whatever name called
6. Legal Status of the Trust
7. Objects of the Trust whether it is religious/relief of poor/yoga/preservation of environment/advancement of other objects of general public utility/education/medical relief/preservation of monuments or places or objects of artistic or historic interest.
8. Date of Modification of Objects, if any.
9. Whether the application granted in the past is rejected or the registration is cancelled? If yes, details of the order cancelling the same.
10. If the applicant is registered under FCRA, 2010? If yes, then details of the same.

Procedure of registration under section 12AB

Step-1: Log in to Income Tax India E-Filing Portal using to login credentials and password

Step-2: Navigate to “Income Tax Forms” under E-File tab and select Form 10A/ 10AB, as the case may be

Step-3: Select the option “Prepare and submit online” to fill requisite details in the form

Step-4: Attach the requisite document along with Form 10A/10AB

Step-5: Submit the form using digital signatures or EVC

Step-6: On receipt of application in Form No. 10A or 10AB, as the case may be, the PCIT or CIT shall process the application within the prescribed time limit: -

• In case the applicant is already registered u/s 12AA or in case of provisional registration, where Form No. 10A has been submitted by the applicant: - 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 registration.
• In cases where Form No. 10AB has been filed, order granting registration or rejection or cancellation shall be in Form No. 10AD.

For trusts/institutions which intend to get themselves registered for the first time have to follow the new procedure which is as under –

Step no 1: Getting Provisional Registration

Step no 2: Converting Provisional registration into Final Registration

For Seeking Provisional registration- Form No. 10A

The time limit for filing application is at least one month prior to the commencement of the previous year relevant to assessment year from which the said registration is sought. Those trusts/ institutions which intend to seek registration from FY 2021-22 (i.e. AY 2022-23) Since the corresponding rules and forms were not available before 01.03.2021 such application could not be made. Considering this situation, an exception is being provided under rule 17A of the Income-tax rules, 1962- In case of an application made under sub-clause (vi) of clause (ac) of sub-section (1) of section 12A during previous year beginning on 1st day of April, 2021, the provisional registration shall be effective from the assessment year beginning on 1st day of April, 2022.

Accordingly, an application made during the FY 2021-22 for registration under [Section 12(1)(ac)(vi) i.e. Registration for the first time] then the provisional registration granted will be effective from same Financial year (i.e. relevant assessment year). It be kindly noted this exception is provided for covering the year of transition and not applicable for subsequent Assessment years i.e. from AY 2023-24. For those subsequent periods, application has to be made a month prior to the start of previous year relevant to that assessment year in which registration is sought.

Once the Trust Organization or NGO is established, they have to register as per Section 12A of the Income Tax Act for claiming exemption under Section 11 and 12 of the Income Tax Act. Section 12A enables non-profit entities such as Charitable Trusts, Non-Profit Organization, Welfare Societies, and Religious Institutions etc to claim full tax exemption as per Section 11 and 12 of the Income Tax Act, 1961. The non-profit entities who do not work for profit, rather for the welfare of the people and the society, and are hence, non-profits are considered eligible for Section 12A registration. As their work is considered a selfless act and they essentially do the work that the government ought to do, they are provided with tax-exemptions.

If any non-profitable trust or NGO has not registered for 12A, their financial receipts or transactions would be considered as taxable.

Private or family trusts are not allowed such exemptions and cannot obtain 12A registration. Once the trust or organization is eligible they must fill the 10A form through online application. The digital signature is required for the applicant trust or organization to file 10A. The 10A form can also be filed electronically through the electronic verification code.

While registering for Section 12A, along with the 12A application form other key documents are required for the trusts, societies and organizations.

Section 12A registered trusts or NGOs can also receive multiple benefits under registration of Section 80G. By registering for Section 80G, trust and NGO tend to increase their value and respect due to which donors are more confidently able to donate large amounts towards them. Donors feel a sense of humanity and satisfaction by donating to such renowned trusts or NGOs. The government funds and grants are easily available to such trusts and NGOs which are registered with Section 12A and Section 80G. The donor can donate only the 50% of their total income in order to receive the tax exemption.

Even if the trusts and NGOs are registered, there are some terms and guidelines related to Section 12A and Section 80G. These are:

• If charitable organizations registered as NGO are working for a specific caste or community, then the NGO will be disqualified from the exemption of tax.
• If the NGO or trust has their other business through which they have other income then they are not eligible for the exemption.
• The trusts and NGOs should only accept cash donations till an amount of     2,000 from the donors.
• Amounts exceeding     2000 should be done through electronic transfer or through cheque.
• These trusts and NGOs should regularly maintain account books and receipts otherwise will be non-eligible for the exemption.
• The NGO should also be registered under the Societies Registration Act of 1860 or Section 8 Company Registration Act of 2013.
• They should be registered with Section 12A and Section 80G in order to gain exemption from tax on the generated income.

PAN is to be obtained by the following persons:

• Every person if his total income or the total income of any other person in respect of which he is assessable during the previous year exceeds the maximum amount which is not chargeable to tax.
• A charitable trust which is required to furnish return under Section 139(4A)
• Every person who is carrying on any business or profession whose total sales, turnover, or gross receipts are or is likely to exceed ₹ 5,00,000 in any previous year
• Every person who intends to enter into specified financial transactions in which quoting of PAN is mandatory
• Every non-individual resident persons and person associated with them if the financial transaction entered into by such non-individual resident persons during a financial year exceeds    2,50,000.

Note: Persons associated with non-individual resident persons means the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of the non-individual resident persons or any person competent to act on behalf of such persons. A person not covered in any of the above can voluntarily apply for PAN.

The Return Form can be filed with the Income-tax Department in any of the following ways, -

1. by furnishing the return in a paper form.
2. by furnishing the return electronically under digital signature.
3. by transmitting the data in the return electronically under electronic verification code.
4. by transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR-V

As registration under Section 12AB is for tax exemption, an NGO which has not registered under this cannot enjoy the privilege of tax planning and would have to pay surplus during the year. All Charitable trusts, Societies, and Section 8 Companies, except Private or family Trust, are eligible to register under Section 12AB. But before registration under 12 AB and 80G, an NGO has to get itself first registered under the Income tax by following the below-mentioned steps. The overall process may take up few months and valid for 5 years.

Section 12AB has been amended to provide the followings-

• It is provided in section 12AB that where the trust or institution is already registered under section 12A or section 12AA and on an application is made under section 12A(1)(ac)(i), registration shall be granted by the Principal Commissioner or the Commissioner by passing an order within a period of three months from the end of the month in which the application was received and such registration shall be valid for a period of 5 years.
• It appears that in the case of re-registration of an existing trust or institution, the Principal Commissioner or the Commissioner is not empowered to call for any documents or information or to make any inquiry for granting the registration under section 12AB. The re-registration will be granted on the basis of the existing registration. This procedure has been introduced for periodic review of the conditions on which registration was granted or approval was given for enjoying the exemption.
• It is to be noted that at the time of renewal of registration, the Commissioner shall call for such documents or information and make an enquiry to satisfy himself about the genuineness of the activities of the trust or institution and also the compliance of such requirement of any other law for a time being enforced by the trust or institution which may be material for the purpose of achieving its object.
• After being satisfied, the Principal Commissioner or the Commissioner shall pass an order granting registration under Section 12AB. Such order of registration shall also be for a period of five years only and this shall continue after every 5 years. All subsequent application for renewal of registration will need to be made at least six months prior to the expiry of the period of the earlier registration.
• Such order of registration can be passed by the Commissioner within a period of six months from the end of the month in which the application for renewal of registration is made.

(i) Granting of registration by the Principal Commissioner or the Commissioner after receipt of an application under the circumstances specified in section 12A (1)(i) to (vi)-

The Finance Act 2021 have removed the concept of perpetuity and have provided that the registration of even existing NGO and Trust registered u/s 12A and 12AA of the Income Tax Ac should register one time before 30th June 2021 as per Section 12AB. The attempt is to make entire process online.

The existing NGOs registered before 1st April, 2021 are required to register again under the new scheme. The entire process of registrations/ approvals is completely electronic and both the new and existing NGOs shall be issued a 16 digit URN. These changes are applicable from 1st April 2021 and the existing NGOs are required to re- register before 30th June, 2021.

Stepwise process for Re- registration of Trust and NGO in Income Tax under Form 10A

Step 1: Go to https://www.incometaxindiaefiling.gov.in

Step 2: Login – Enter your User ID & Password

Step 3: Go to e-file and select Income Tax Forms

Step 4: Select Form 10A- Application for registration or provisional registration or intimation or approval or provisional approval and click on the Continue Tab

Step 5: The General Instruction page will appear kindly read the general instruction very carefully

Existing Trust registered u/s 12AB of the Income Tax Act who wishes to claim exemption u/s 11 and u/s 12 are mandatorily required to obtain registration under the Income Tax Act in by filing Form No. 10AB. Trust which is registered as per new law u/s 12AB of the Income Tax Act is required to make application for re registration u/s 12AB in Form 10AB. Finance act 2020 has introduced new concept of provisional registration to tackle the practical issue of difficulty in granting registration or approval before the start of actual charitable activities by a trust or an institution.

       Form Nos. 10AB shall be furnished electronically online through digital signature, if the return of income is required to be furnished under digital signature or through electronic verification code in a case non availability of Digital Signature. Form Nos. 10AB must be verified by the person who is authorized to verify the return of income under section 140, as applicable to the applicant.

            Form 10AB can be used for registration by entities that is provisionally registered u/s 12AB of the Income Tax Act as per the new law and the period of approval is due to

• Fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or (v) or (vi) or (via) of section 10(23C) approved under the first proviso effective from 1st April 2021
• Trust/Institute registered under section 12AB
• Institution/fund approved under the proviso of clause (vi) of section 80G (5) effective from 1st April 2021.

In case of a newly registered Trust, the trust will be granted provisional registration and that too for a maximum period of three years. At the end of the first three years, the trust needs to be converted to normal or final registration which shall have a validity of 5 years. This registration shall remain valid for a period of five years and to be renewed after every 5 years as per provisions of the act for an existing trust. Further, there is no provision so far in the Act to extend the period of three years further. Hence, the Trust must commence the charitable activities within this period. Since the application for normal registration is required to be made within 2.5 years, charitable activities must be commenced by that time as while granting the normal provision u/s 12AB this factor will be seen.

An application which is pending for registration as on 01st April 2021, the same will be considered as an application pending under the new provisions of section 12AB. No separate application is required to be made for such pending application. The registration will be given within three months but the registration will be a provisional registration and will be valid for a period of three years. The pending application shall be at par with a fresh registration for a newly established trust.

(a)Exemption to Trust:

A trust or an institution which is granted registration under section 12AB (1) (a) can avail the exemption under section 11 and under section 12 from the assessment year in which registration was granted to the trust or institution. It means the exemption will continue and there will be no break in the exemption that the trust or institution is enjoying. It implies that the new registration certificate will be applicable from the Assessment Year from which the registration was issued originally.

(b)Subsequent registration of Trust:

When a trust or institution is registered under section 12AB and the period of 5 years of the said registration is due to expire, then the trust or institution shall at least 6 months prior to the expiry of the stated period of 5 years apply for renewal of registration.

The Income Tax Act has provided the procedure and time limit for migrating to the new registration scheme u/s 12AB for an existing registered trust. Nowhere in the act is it stated that migration is mandatory. There is no direct express provision in the statute which states that the migration to section 12AB is mandatory. It is further provided in amended section 12A that in order to claim exemption u/s 11 and u/s 12, a trust must be registered u/s 12AB. Thus if a trust is not registered u/s 12AB, it cannot avail exemption u/s 11 and u/s 12. In case a trust does not migrate to section 12AB, it will it be attracted by section 115TD i.e. Exit Tax.

The Commissioner/Director of Income-tax shall take action as follows-

(1)Issue of deficiency letter - If any defect is noticed in the application in Form No. 3CF or if any relevant document is not attached thereto, the Commissioner of Income-tax or, as the case may be, the Director of Income-tax shall serve a deficiency letter on the applicant before the expiry of one month from the date of receipt of the application Form in his office.

(2)Removing the deficiency -The applicant shall remove the deficiency within a period of 15 days from the date of service of the deficiency letter or within such further period which, on an application made in this behalf may be extended, so however, that the total period for removal of deficiency does not exceed 30 days. If the applicant fails to remove the deficiency within the period of 30 days so allowed, the Commissioner of Income-tax or, as the case may be, the Director of Income-tax shall send his recommendation for treating the application as invalid to the Member (IT), Central Board of Direct Taxes. The Central Government, if satisfied, may pass an order treating the application as invalid.

(3)Scrutiny and recommendation - If the application Form is complete in all respects, the Commissioner of Income-tax or, as the case may be, the Director of Income-tax, may make such inquiry as he may consider necessary regarding the genuineness of the activity of the association or university or college or other institution and send his recommendation to the Member (IT) for grant of approval or rejection of the application before the expiry of the period of 3 months to be reckoned from the end of the month in which the application Form was received in his office. Action by the Central Government

The conditions subject to which approval is to be granted are laid down in Rules 5D and 5E, as follows:

Scientific research association -The conditions laid down are:

1. The sole object of the applicant scientific research association shall be to undertake scientific research.
2. The applicant scientific research association shall carry on the scientific research activity by itself.
3. The scientific research association shall maintain books of account and get such books audited by an accountant as defined in the Explanation to sub-section (2) of section 288 and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139.
4. The scientific research association shall maintain a separate statement of donations received and amount applied for scientific research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to in (3) above. /li>

If the Commissioner of Income-tax or the Director of Income-tax is satisfied

(i)that the scientific research association,—

1. Post-approval report by Commissioner
2. has failed to furnish its audit report, or
3. has not furnished its statement of the sums received and the sums applied for scientific research, or
4. has ceased to carry on its research activities, or its activities are not genuine, or
5. is not fulfilling the conditions subject to which approval was granted to it or

(ii)that the university or college or other institution,—

1. is not maintaining separate books of account for research activities, or
2. has failed to furnish its audit report, or
3. has not furnished its statement of the sums received and the sums used for research, or
4. has not furnished its statement of the sums received and the sums used for research, or
5. is not fulfilling the conditions subject to which approval was granted to it,

He may after making appropriate enquiries furnish a report on the circumstances referred to in clauses (a) to (e) above to the Central Government within 6 months from the date of furnishing the return of income under section 139(1)

.It is important to note that when registration is granted under section 12A, it does not mean that section 80G approval is to be given i.e. registration under section 12AB will not provide automatic approval under section 80G. Section 80G applies only to charitable trusts or institution. It does not apply to religious trust or institutions. The recipient of money gives a receipt of donation, based on which the donor is entitled to claim deduction provided, the recipient institution is approved under section 80G of the Income Tax Act’1961.

Under section 80G so as to provide that no deduction shall be allowed under the section 80G in respect of donation of any sum exceeding ₹ 2000/- unless such some is paid by any mode other than cash. Government has taken this step in order to provide cash less economy and transparency. Contributions to the following are eligible for 50 % reduction subject to 10 % of adjusted gross total earnings:-Donation to the Government or any local authority to be utilized by them for any charitable functions other than the function of advertising family planning.

Qualifying Limit: -The certifying limitations u/s 80G is 10% of the adjusted gross overall income. The limit is to be applied to the adjusted gross overall income. The 'adjusted gross total earnings' for this purpose is the gross total income (i.e. the sub total of income under various heads) minimized by the following:

1. Amount deductible under Sections 80CCC to 80U (however not Area 80G)
2. Exempt earnings.
3. Long-term capital gains
4. Earnings described in Sections 115A, 115AB, 115AC, 115AD and 115D, associating with non-residents and foreign business.

Section 80G (5) prescribes certain conditions to be satisfied to get the approval u/s 80G:

• The Institution should be established in India for Charitable purpose.
• If the Institution or fund is deriving any income, such income should not be liable to inclusion in its total income under the provisions of sections 11and 12 or clause (23AA) or clause (23C) of section 10.
• If the institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11shall not apply in relation to such income,
• If the institution or fund maintains separate books of account in respect of such business;
• the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and
• the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business;
• The instrument under which the institution is constituted shall not contain any provision for transfer or application of the income or asset for any purpose other than a charitable purpose.
• The institution should not be for the benefit of any particular religious community or caste.
• The institution should maintain regular accounts of its receipts and expenditures.

• There is ceiling limit up to which the benefit is allowable to the donor. If the amount of deduction to a charitable organization or trust is more than 10% of the Gross Total Income computed under the Act (as reduced by income on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of 10% of Gross Total Income shall not qualify for deduction under section 80G.
• In other words, while computing the total income of an assessee and for arriving at the deductible amount under section 80G, first the aggregate of the sums donated has to be found out. Then 50 % of such donations have to be found out and it should be limited to 10 % of the gross total income. If such amount is more than 10 % of the gross total income, the excess will have to be ignored.
• Any donation in excess of ₹ 2,000/- under section 80G should be made any mode other than cash.

Who can avail tax savings under 80G?

Who cannot avail tax savings under section 80G?

• If a donation is made to a foreign trust you cannot qualify for tax savings under section 80G.
• If donations have been made too one or more political parties you cannot avail or claim deduction for such donations. Deductions cannot be claimed even for printing or publishing of brochures, flyers and pamphlets
• Donations by NRI if made to eligible institutions and trusts also qualify for tax exemption under section 80G.
• If donation is made from salary and if the donation receipt carries the name of the employer then employees can claim deduction under section 80G

As per the amendment made by the Finance act, the trust is required to furnish statement of particular s of donation in respect of each financial year, beginning from financial year 2021-2022, in Form No. 10BD and shall be verified in the manner indicated therein. Form No. 10BD, shall be furnished electronically through digital signature, if the return of income is required to be furnished under digital signature or through electronic verification code in a case of no digital signature

The reporting person, referred to in sub-rule (2) i.e. any research association, university, college or other institution or company or fund, shall, while aggregating the amounts for determining the sums received for reporting in respect of any person, take into account all the donations of the same nature paid by that person during the financial year; and Proportionately attribute the value of the donation or the aggregated value of all the donations to all the persons, in a case where the donation is recorded in the name of more than one person and where no proportion is specified by the donors, attribute equally to all the donors. The above provision shall come into effect from 1st April 2021.

The Trust is required to file Form 10BD within 2 months from the end of the Financial Year i.e. on or before 31st May, immediately following the financial year in which the donation is received.

The reporting person shall furnish the certificate of donation the donor in Form No. 10 BE specifying the amount of donation received during financial year from such donor, beginning with the financial year 2021-2022. The certificate of donation in Form 10BE is required to be furnished to the donor on or before the 31st May, immediately following the financial year in which the donation is received

To undertake and promote reinvestment of business profits in areas where massive capital input is required for socio-economic development, a tax incentive has been provided under 35AC, of the Income Tax Act allowing for full deduction of the entire amount paid by a taxpayer carrying on a business or profession for financing projects or schemes promoting social and economic welfare. The objective of the said provision is to encourage business organizations and wealthy individuals to contribute more in social and economic welfare of general public. By donating any amount for any approved project under the provision of 35 AC of Income Tax Act, a donor will receive 100% rebate of Income Tax on the donated amount. Thus NGOs can raise millions of rupees for approved projects under 35 AC of Income Tax Act leading to mutually beneficial relationship between corporate sector and civil society.

1. Construction and maintenance of drinking water projects in rural areas and in urban slums, including installation of pump-sets, digging of wells, tube wells and laying of pipes for supply of drinking water.
2. Construction of dwelling units for the economically weaker sections.
3. Construction of school buildings primarily for children belonging to the economically weaker sections of the society.
4. Establishment and running of non-conventional and renewable sources of energy systems.
5. Construction and maintenance of bridges, public highways and other roads.
6. Any other programme for uplift of the rural poor or the urban slum dwellers, as the National Committee may consider fit for support, like :Promotion of sports, Pollution control
7. Establishment and running of educational institutions in rural areas, exclusively for women and children up to 12 years of age;
8. Establishment and running of hospitals and medical facilities in rural areas exclusively for women and children up to 12 years of age;
9. Establishment and running of crèches and school for the children of workers employed in factories or at building sites;
10. Encouraging the production of bacteria induced fertilizers;
11. Any programme that promotes road safety, prevention of accidents and traffic awareness;
12. Construction of hostel accommodation for women or handicapped individuals or individuals who are of the age of sixty-five years or more;

Any scientific research association / organization which has its objects, carrying out the scientific research or social science research can be approved under section 35 I(ii) and 35I(iii) in accordance with the guidelines and other conditions as may be notified in the official gazette of the central government. The donor will receive 175% weighted deduction on the donated amount as per amendment by the Finance Act, 2010.

1. any scientific research association which has as its object the undertaking of scientific research, or to a university, college or other institution to be used for scientific research, or
2. a university, college or other institution to be used for research in social science or statistical research. The deduction is however subject to the conditions—
• that such association, university, college or other institution is for the time being approved, in accordance with the guidelines, in the manner and subject to such conditions as may be prescribed; and
• That such association, university, college or other institution is specified as such, by notification in the Official Gazette, by the Central Government.

Under the first proviso to section 35(1) of the Act, the scientific research association, university, college or other institution is required to make an application in the prescribed form and manner to the Central Government for the purpose of grant of approval, or continuance thereof.

Form of application - The application must be made in the following Form, in duplicate: by a scientific research association .The application for approval under section 35 1 (ii) / 35 1 (iii) of IT Act 1961 may be submitted FORM NO. 3CF | (See rules 5C, 5D, 5E and 5F) | Application for registration or approval to the CIT/ DIT- IT of the jurisdiction of the assessee association along with following information in prescribed form.

• List of assets / facilities owned used for scientific research / Social science research by the applicant,

The Central Government has now set up a digitized database of all NGO/trust/society in India. Any NGO must register itself with the Niti Aayog if it wants to avail of any funding/grants/schemes from the Government. Further, the registration needs to be done on the NGO Darpan portal of the Niti Aayog.

Any NGO, a Section 8 corporation or charitable trust can apply for registration under Section 12 AB if it wants to get an exemption from income tax. Without the 12AB certificate for NGO, the receipts of the NGO will be entitled to normal tax rates. On the other hand, a registration under section 80G of the Income Tax Act provides tax benefits (80G deduction) to the donor of an NGO.

You can apply for both the 12AB certificate for NGO and registration under section 80G together or separately. If you wish to apply for them separately, you must apply first for 12AB registration. As per the Income Tax Act, 1961, 12AB registration is a must if you want to apply for registration under 80G. There is no time limit prescribed for NGO DARPAN Registration, if you have valid PAN Card and registration certificate of NGO then you are allowed to register. The application for registration has to be filed with the jurisdictional Principal Commissioner or commissioner of Income Tax (exemptions).

The NGO DARPAN is a free facility that the NITI Aayog provides the NGOs and VOs (Voluntary Organization) to help them keep themselves updated regarding new government schemes and grants. The platform, which is a collaboration of the NITI Aayog and the NIC (National Informatics Centre), will help build a stronger partnership between NGOs and the government. In the newly introduced Form -10A for getting registration under Section -80G and Section -12AB of Income Tax Act, 1961 they are asking about DARPAN ID registration number and registration date. All Voluntary Organization/Non Government Organization are mandatory to register under Niti Aayog for receiving grants under various schemes of Ministries/ Departments/Government Bodies. To achieve the purpose of easy of doing business and other social benefits that contributes to the nation building activities, a dedicated Centralized Portal is made available to NGO/VO in which they can easily enroll with Government and altogether centralized database is available with Government of India which helps them in Formation of Social welfare activities, which can be run through these NGO/VO. Any VO / NGO which is registered as a trust/ society/ a private limited nonprofit company, under section-25 Company of the Indian Companies Act, 1956 or Companies Act, 2013 are eligible to get registered under Niti Aayog. As of now no Individual (person) Registration is allowed.

• Already Signed Up NGOs from old portal :
• Provide any of three fields Pan number, Mobile or Email in user ID field
• Input the OTP received at your mobile number, confirm it
• Create your new password
• Sign in to the portal.
• All existing details like, Profile, Office bearer’s details, Source of Funs, NGO registration details have been ported into new website and will be available after signing in.

• 1.Visit – https://ngodarpan.gov.in/
• 2.Click on Login/Register Link and click on Sign up Option.
• 3.Provide Name of NGO /VO, Contact Person Mobile Number and Contact Person Mail Id. Put Security Code and Submit the request and after That Provide PAN Detail of NGO/VO
• 4.You will receive OTP on Your given Mobile Number and Mail id. After verification of OTP, now generate Password for further Login Purpose.
• 5.Now again come to Home page and Use Sign In option for Login Purpose. Enter your Login ID and Password.
• 6.After Login, You will Find PAN Number and Name of NGO/VO as pre-filed.
• 7.Now provide following details to proceed further.
    a.NGO Address     b.NGO/VO Registration authority (Under which act NGO/VO is registered)     c.Provide Registration Number and Upload RC Copy for Verification Purpose.     d.Act Name and Date of Registration under this Act     e.Now provide details of all other registration details, if registered like- FCRA Registration, GST Registration Etc.
• 8.Now provide atleast 3 Members detail of Executive Committee/ Founder Members/ Office Bearers as on date of Application.
• 9.Now Provide details of all Sources of Funds, received from Government bodies in Last 5 years.
• 10.Provide Detail of Key Person, who can be contacted in case of any Query.
• 11.Now provide details relating to NGO/VO Core area of Working with state detail. This is critical part because, you will receive grant from Government Departments according to their working area.

A signed up NGO having existence for a minimum of three years can be registered under this arrangement. The Ministry sends out the accepted application to local knowledge people for confirmation of the credentials and records of the company. On their positive opinions, the FCRA Section of the Ministry issues the Certification of Registration to the candidate organization. It is necessary to receive foreign contribution just in one designated bank account. For that reason, the applicant organization should open a fresh savings account with the intention to operate it for such funds and mention it in the application. The said Ministry will straight inform the worried bank to keep watch on the use of the foreign contribution and report back to the Ministry in case of any inconsistency. The organizations signed up under the FCRA need to keep separate accounts incurred under the FC head and send a return in the recommended format to the Ministry together with the audited statement of accounts of the previous year by 31 July every year.

The non government organizations registered under the FCRA ought to inform to the Ministry about any change in name of the organization, its Registered Workplace and purposes and objects within 30 days of the appropriate change. Similarly, prior consent will be needed from the stated the Ministry for any modification in the designated bank or replacement of more than half of members of the governing body at the time of its registration under the FCRA. The management ought to be cognizant of various arrangements of the FCRA and need to strictly follow the exact same otherwise they may deal with a number of extensive punishments under the Act. Foreign Contribution Regulation Act (FCRA) was enacted in the year 1976 and just recently, modified in the year 2010 with the prime objective of managing the approval and usage of foreign contribution and foreign hospitality by persons and associations working in the important locations of nationwide interest. The focus of this Act is to ensure that the foreign contribution and foreign hospitality is not made use of to affect electoral politics, public servants, judges and other people working in to the crucial locations of national interest viz reporters, printers and publishers of newspapers, etc.

For obtaining registration under the FCRA, the applicant association should preferably be registered under any of the following Acts:-

• Societies Registration Act, 1860
• Indian Trusts Act 1882
• Charitable and religious Trusts Act 1920
• Companies Act 2013 (Section 8)

The Central Government has, vide notification dated 10.11.2020 brought into force the Foreign Contribution Regulation (Amended) Rules of 2020 (Amended Rules 2020) amending the Foreign Contribution Regulation Rules, 2011.

Among the many changes brought in to force, the key changes introduced in the Act is as follows-

1.Restriction on accepting foreign contribution- Section 3(1)(c) of the Act prohibits the acceptance of foreign contribution by a judge, government servant or employee of any corporation or any other body controlled or owned by the Government has now been amended to include within its ambit ‘public servants’ as defined under Section 21 of the IPC. In addition to the same, the explanation 2 added to the said sub-clause defines corporation to mean a corporation owned and controlled by Government. This inclusion is a welcome move in ensuring the autonomy of persons involved in discharge of public functions despite not being employees of the Government

2.Cap on utilization of Funds for administrative purposes- Section 8(1)(b) of the Act has been amended to restrict the utilization of foreign contribution towards administrative expenses to 20% from the previous cap of 50%.

3.Liberty to Surrender One’s Certificate Now, FCRA registered persons can surrender their FCRA Certificate by making a request to the Central Government, provided the government is satisfied that the provisions of the FCRA have not been contravened in any manner by such Applicant.

1. Restriction on utilization funds pending governmental inquiry
2. Earlier a person held guilty under the Act was restrained from utilizing/receiving foreign contribution. Now, the government can restrict utilization/receipt of funds if it has reasons to believe that a person who has been granted prior permission to accept foreign contributions has contravened the provisions of the Act, on the basis of any information or report and after holding a summary inquiry.
3. Enquiry before renewal of FCRA certificate-Now the Central Government can make an enquiry to satisfy itself that the person who is getting certificate renewed, has fulfilled all conditions specified in the Act even while renewing the registration.
4. Submission of Identification Details– Office bearers, directors or key functionaries of the registered body have to submit their Aadhar Card (for citizens) and passport / Overseas Citizen of India (OCI) Card details (for Foreigners) even for renewal of their Certificate of Registration.
Increased suspension period-. Now FCRA certificate can suspended for a further period of 180 days, in addition to the existing period of 180 days.

The amended Foreign Contribution (Regulation) Act, 2010 mandates that every person/NGO/ Association (hereinafter referred to as an “entity”) that have been granted FCRA certificate of registration or prior permission u/s 12 of the Act shall open an “FCRA Account” at specified branch of State Bank of India in New Delhi. The Central Government vide notification dated 07.10.2020 has notified New Delhi Main Branch (henceforth NDMB) of SBI, 11, Sansad Marg, New Delhi-110001 as specified branch.

Presently, there are approximately 23,000 entities which have got a Certificate of Registration or prior permission to receive foreign contribution. They now have to open a “FCRA Account” for inward remittance of any foreign contribution at the aforementioned specified branch (i.e. NDMB) on or before 31.03.2021. From the date of opening of “FCRA Account” in NDMB or from 31.03.2021, whichever is earlier, no inward remittance will be allowed in any account other than that opened in NDMB.

The following steps and procedure will be followed so as to ensure hassle-free opening and operation of “FCRA Account” by entities making requests for fresh FCRA registration/prior permission as well as existing FCRA registration/prior permission holders having FCRA accounts in any Branch or Bank other than NDMB Branch of SBI.

• i.Any entity which seeks to receive foreign contribution may approach either the nearest SBI Branch or any other SBI Branch of their choice for submitting the completed Account Opening Form (AOF) for KYC/photo/signature verification, scanning and forwarding through mail as well as sending hard copy of their AOF for opening of “FCRA Account” at NDMB.
• ii.The applicant shall collect the Account Opening Form (AOF) physically or download the same from the website of SBI and submit the duly filled up form along with mandatory KYC documents, for scrutiny / verification. Mandatory documents should include KYCs of signatories and KYCs of Controlling Person / Beneficial Owner (in terms of guidelines issued by RBI).
• iii.The applicant shall receive an acknowledgement in this regard from the AOF accepting Branch.
• iv.The AOF accepting branch of SBI would scrutinize AOF and KYC documents and email the verified documents to SBI, NDMB within 3 working days from the date of receipt of completed documents. SBI, NDMB shall confirm to the applicant entity through an email regarding receipt of AOF and other documents within 1 working day of its receipt.
• The NDMB will intimate to the applicant entity the details of “FCRA Account” so opened within 3 working days from the date of receipt of duly verified scanned copies of complete set of AOF and KYC documents from e-mail ID of the receiving branch. The intimation will be sent by registered email ID as well as through SMS.
• vi.“Entity” can maintain their existing FCRA Accounts for Keeping or Utilization purposes.
• vii.The complete details of the specified branch i.e. SBI NDMB are as under:

Under GST, charities will come be subject to pay Goods and Services Tax. This means that GST will be applicable on some of the services and goods supplied by a charitable trust or an NGO. Union Budget 2021 Outcome-1st February 2021: para 7 of schedule II of CGST Act is removed. Further, section 7 of the CGST Act was amended to include a new clause under the definition of supply. It now includes activities or transactions involving the supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. Earlier, this transaction would have been considered as only supply of goods under schedule II. So, the scope is expanded now for levy. The change will apply once CBIC notifies. Criteria for a charitable trust to be exempted from GST-

There are certain criteria for a charitable trust or an NGO to be exempted from the Goods and Services Tax. The charitable trust or NGO must be registered under Section 12AB of the Income Tax Act, and the services provided by the charitable trust or the NGO must be for a charitable cause.

What is a charitable activity under GST? The Goods and Services Act also specifies the criteria to be called a charitable activity. They are:

• Public health services, such as:

1. 1.Counseling of terminally ill persons or counseling for physically disabled
2. 2.Counseling for people affected with HIV or AIDS
3. 3.Counseling for alcohol-dependent persons

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public. CSR is a gesture of showing the company’s concern & commitment towards society’s sustainability & development. CSR is the ethical behavior of a company towards society.

Many companies view CSR as an integral part of their Brand Image, believing that customers will be more likely to do business with brands that they perceive to be more ethical. Every company having

• Net worth of ₹ 500 crore or more, or
• Turnover of ₹ 1000 crore or more or
• Net profit of ₹ 5 crore or more

during the immediately preceding financial year shall constitute a CSR Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director (if company is not required to appoint an independent director under section 149(4), it shall have in its CSR Committee two or more directors). The Board of every company shall ensure that the company spends, in every financial year, at least 2% of the average net profits of the company made during the three immediately preceding financial years (where company has not completed three financial years since its incorporation).

If company fails to spend such amount, the Board shall specify the reasons for not spending the amount in its Board Report and transfer the unspent amount to a Fund specified in Schedule VII, within a period of 6 months of the expiry of the financial year. If any amount remaining unspent pursuant to any ongoing project, shall be transferred by the company within a period of 30 days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the company in pursuance of its obligation towards the CSR Policy within a period of 3 financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of 30 days from the date of completion of the third financial year.

If the entity spend more than the prescribed amount, such excess amount can be set off against the requirement to spend up to immediate succeeding three financial years subject to condition that excess amount is not arising from CSR activities and resolution has been passed to this effect by Board. Expenditure incurred by foreign holding company for CSR activities in India will qualify as CSR spend of the Indian subsidiary if, the CSR expenditures are routed through Indian subsidiaries and if the Indian subsidiary is required to do so as per section 135 of the Act. The CSR Rules specify that a company which does not satisfy the specified criteria for a consecutive period of three financial years is not required to comply with the CSR obligations, implying that a company not satisfying any of the specified criteria in a subsequent financial year would still need to undertake CSR activities unless it ceases to satisfy the specified criteria for a continuous period of three years.

A company may engage international organizations for designing, monitoring and evaluation of the CSR projects or programs as per its CSR policy as well as for capacity building of their own personnel for CSR. A company may also collaborate with other companies for undertaking projects or programs or CSR activities in such a manner that the CSR committees of respective companies are in a position to report separately on such projects or programs in accordance with these rules. The Board of a company shall satisfy itself that the funds so disbursed have been utilized for the purposes and in the manner as approved by it and the Chief Financial Officer or the person responsible for financial management shall certify to the effect. In case of ongoing project, the Board of a Company shall monitor the implementation of the project with reference to the approved timelines and year-wise allocation and shall be competent to make modifications, if any, for smooth implementation of the project within the overall permissible time period.

Activities which may be included by companies in their Corporate Social Responsibility Policies Activities relating to:—

• Circular No. 05/2021 dated 22nd April, 2021 it was clarified that spending CSR funds for COVID-19 is an eligible CSR activity. Also, spending of CSR funds for setting up makeshift hospitals and temporary COVID Care facilities is an eligible CSR activity under item nos. (i) and (xii) of Schedule VII of the Companies Act, 2013 relating to promotion of health care, including preventive health care and disaster management respectively.

E-Form CSR-1 is required to be filed pursuant to Section 135 of the Companies Act, 2013 and Rule 4 (1) and (2) of the Companies (Corporate Social Responsibility Policy) Rules, 2014. Form CSR-1 is required to be filed with the Registrar of Companies, with effect from the 01st day of April 2021. Form CSR-1 is a registration form for getting CSR funding by implementing agencies from the corporate sector. The Form CSR-1 is termed as Form for “Registration of Entities for undertaking CSR Activities”. The Form mainly consists of two parts, first part is relating to the information about the entity who intends to undertake CSR activities. Second part of Form CSR-1 is certification by practicing professional. On successful submission of Form CSR-1, a unique CSR Registration Number shall be generated by system automatically to applying organization.

• The e-Form will be processed in STP mode
• On successful submission of the e-Form CSR-1, SRN will be generated and shown to the user which will be used for future correspondence with MCA.

Email & Immunity Certificate-When an e-Form is successfully processed, an acknowledgement of the same is sent to the user in the form of an email to the email id of the entity. Further, a digitally signed approval letter along with CSR Registration number with Format CSRXXXXXXXX where X represents system generated unique sequential number will be sent to the FO User as well as the email ID of the entity as entered in the e-form.

Once you have the pre-requisites ready with you, you will need to put together a Trust Deed. In order to do make a trust deed, you will need to furnish the following:

• Deed should be made on a stamp paper of given value
• Passport size photographs and identity proof of Settler
• Passport size photographs and identity proof of the two trustees
• Passport size photographs and identity proof of two witnesses
• Settler’s signature on all pages of the deed

All the trust/societies/ institutions/ fund/ hospitals (hereinafter called “applicant”) are mandated to be registered under Section 12A and 80G or Section 12AA to obtain fresh registration in the prescribed format under Sec 10(23C) of the Act. All the existing Charitable Trusts and other Institutions registered u/s sections 12A, 12AA or 10(23C) will have to apply afresh for registration under the new provisions of sections 10(23C) or 12AB on or before 30/06/2021.

• Fresh registration will be granted for a period of 5 years only. As against registration or approval which is currently granted for perpetuity (until revoked by tax authority). In short, now registration will be there for a limited period of 5 years at any one point of time. All the Trusts/Institutions which are claiming exemption u/s 10(23C) or 11 will be required to renew the registration & approval every 5 years.
• Where a Trust or Institution has made modification in its objects and such modifications do not conform to the conditions of registration, application has to be done again with the designated authority within 30 days from the date of such modification.
• Trusts have to make an application in Form 10A with the Principal Commissioner or Commissioner authorized by the Board on or before the due date which shall be 3months from 01.04.2021 i.e. 30th June 2021.

Documents for registration

1. Where the applicant is created or established, under an instrument, self-certified copy of such instrument
2. Where the applicant is created or established, otherwise than under an instrument, self-certified copy of the document evidencing the creation
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 registration under Foreign Contribution (Regulation) Act, 2010 (42 of 2010), if the applicant is registered under such Act;
5. Self-certified copy of existing order granting approval under clause (23C) of section 10;
6. Self-certified copy of order of rejection of application for grant of approval under clause (23C) of section 10, if any;
7. Self-certified copies of the annual accounts of the applicant for a period of immediately three preceding years
8. Where a business undertaking is held by the applicant as per the provisions of sub-section (4) of section 11, self-certified copies of the annual accounts and reports under Sec 44AB of such business undertaking for immediately three preceding years
9. Note on the activities of the applicant.
10. The Commissioner shall on receipt of such application examine the documents provided by the applicant and issue an order in Form 10AC with sixteen digits Alphanumeric Unique Registration Number.

The main feature in this provision is that the registration granted will not be long-lasting and will remain valid only for a period of five years and later needs to be reregistered at the end of every fifth year. This procedure has been introduced for periodic review of the conditions on which registration was granted or approval was given for enjoying the exemption. This has been done to keep a check primarily on the followings-

• Objects of the Trust on which registration was granted are being adhered to or not,
Objects of the Trust on which registration was granted are being adhered to or not
• Genuineness of the activity of the Trust/li>
• Compliances with other laws applicable to the Trust

Compliances with other laws applicable to the Trust

This procedure of re-registration of existing registered charitable trust has introduced due to administrative problems to deal such charitable trust. Currently, there are many trusts in India which are claiming exemption of its income under Income Tax Act but have lost their registration certificates. The Income tax department itself could not trace the registration certificate of many trusts as the registration of the charitable trust was through the Commissioner of Income Tax widely spread over to whole of India. However, based on earlier assessment records, the exemption was being allowed to such trusts. In order to streamline the registration of all the trusts, it is decided to introduce the concept of re-registration so that all of the trusts are given computer-generated URN.

Finance Act 2021, has inserted a new provision in section 80G of the Income tax act, 1961 with respect to Statement of Donation to be filed by Trust in prescribed form where trust that are approved under section 80G are now required to file statement of donation received and also to issue the certificate to the donor. On 26th March 2021 the CBDT has issues Notification no. 19/2021 dated 26/03/2021 which includes details about FORM No. 10BD.-

FORM 10BD- Statement of particulars required to be furnished by any research association, university, college or other institution or company or fund (hereinafter referred to as reporting person) under section 80G (5) (iii) or under section 35(1A)(i) shall be furnished in respect of each financial year, beginning from financial year 2021-2022, in Form No. 10BD and shall be verified in the manner indicated therein. The reporting person shall, aggregate the amounts for determining the sums received for reporting in respect of any person, —

• Take into account all the donations of the same nature paid by that person during the financial year; and
Proportionately attribute the value of the donation or the aggregated value of all the donations to all the persons, in a case where the donation is recorded in the name of more than one person and where no proportion is specified by the donors, attribute equally to all the donors.

The above provision shall come into effect from 1st April 2021

Charity is a voluntary help either in money or kind to the needy. Collective efforts are always more fruitful. Hence, there are various Non-Governmental Organizations (NGOs) and non-profit entities constantly working on charitable activities by raising funds all over the world by forming either an institution or trust. Efforts of such institutions play a significant role in promoting economic development and the social welfare objectives of the Government. Their outreach and more localized approach help to identify the needy and lend a supporting hand. For this reason, Indian government has provided various tax incentives and exemptions to charitable institutions; Section 80G being a significant one. As per 80G, you can deduct your donations to Central and State Relief Funds, NGOs and other charitable institutions from your total income to arrive at your taxable income. Income of the Trust is required to be computed under section 11 on commercial principles after providing for allowance for normal depreciation and deduction thereof from gross income of the Trust.

If an NGO gets itself, registered under section 80G then the person or the organization making a donation to the NGO will get a deduction of 50% from his/its taxable income. The NGO has to apply in Form No. 10G to the Commissioner of Income Tax for such registration.

Earlier, registration under 80G was given as one time registration unless any specific restrictions are provided in the registration certificate itself but finance act 2020 has made some substantial changes in registration process and period for which approval will be given.

The Finance Act, 2021 has made significant changes in the provisions governing such institutions to eliminate the possibility of unintended double deduction / double-counting while calculating application or accumulation of funds. Five Major Changes made in the Income Tax Act- Below are the 5 changes made in the Income Tax Act applicable from 1st April, 2021-

1. Corpus Contributions to be exempt only if invested- As per earlier law, corpus donation (being in the nature of capital receipts), are excluded from income for the year without any further compliance requirement and/or conditions. There were restrictions regarding utilization of such funds. As per Finance Act 2021,

Voluntary contributions made with a specific direction after 1st April 2021 shall form part of the corpus shall be eligible for exemption only if it is invested/ deposited in modes specified under Section 11(5) maintained specifically for such corpus and must not be mixed with other general/ non-corpus funds. Corpus made at the time of incorporation of the trust or out of basic accumulation, anonymous donations, etc. would remain outside the purview of this. Investment condition applies only in respect of corpus contributions which are claimed as tax-exempt. Corpus donations received before 31st March 2021 are not required to be statutorily invested and can be used in the specified manner.

Further, the amount spent from such corpus shall not be considered as an application against the mandatory 85% application of non-corpus income.

In order to be exempt, trust is required to apply at-least 85% of its income to charitable or religious purpose in India. As per the definition provided under tax provisions, charitable purpose includes the following:

• Relief of the poor
• Education
• Yoga
• Medical relief
• Preservation of environment (monuments or places or objects of artistic or historic interest
• Advancement of any other object of general public utility. However, if any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration is not considered to be for charitable purposes, irrespective of the nature of use or application, or retention of the income from such activity unless:
1. such activity of trade/commerce/business is undertaken in the course of the actual carrying out of such advancement of any other object of general public utility and
2. the aggregate receipts from such activity/ activities during the financial year does not exceed 20% of the total receipts of the said trust or institution during that financial year

In addition, income utilized for purchase of capital asset, repayment of loan for purchase of capital asset, revenue expenditure and donation to trust registered under Section 12AB and Section 10(23C) shall also be treated as applied for charitable purposes and hence exempted from tax. Religious Purpose includes the advancement, support or propagation of a religion and its tenets. The income of a religious trust or institution is entitled to exemption, though it may be for the benefit of a particular religious community or caste.

The exemption under Section 11 is available to public religious trusts only and not to trust for private religious purposes.

If a trust or institution is unable to apply 85% of its income from property held under them, the income is still exempt if the following conditions are met.

• The income is deemed to have been applied for charitable purposes in specified scenarios
• 85% of income is neither applied nor deemed to have been applied; the trust is allowed to accumulate such unapplied portion of income under specified conditions to claim the exemption.

If Income deemed to have been applied, then:

1. The whole or any part of the income has not been received during the previous year; or
2. For any other reason, the assessee has an option to:

• apply such income referred to in clause (i) for such purposes during the previous year in which it is received or during the previous year immediately following the said previous year
• Apply such income referred to in clause (ii) for such purposes during the previous year immediately following the previous year in which the income was derived

Such option is to be exercised in Form 9A to be furnished electronically with or without digital signature by the trust within the time allowed for filing return of income u/s 139(1).

If there is accumulation of 85% of income of trust: If a minimum of 85% of the income of trust or institution has not applied or deemed to have been applied as above, it is allowed to accumulate or set aside. And such income shall be exempt, if following conditions are satisfied.

Section 11 of the Income-Tax Act, 1961 excludes from the income of charitable or religious trusts to the extent applied towards the objects of such trusts. However there are several conditions lay down under section 11 of the Act, for the purpose of claiming exemption in respect of the income of a charitable or religious trust. To claim the exemptions, the provisions of section 13 are prominent one. The heading of section 13 is “Section 11 not to apply in certain cases”. Hence, Section 13 provides those exemptions under section 11 which are not available in cases of violation of the provisions of such section. Section 13 (2) provides the conditions, when an income or property or any part of such income or property of the trust or institution is deemed to have been used or applied for the benefit of a person referred to in section 13(3) in the following cases:

1. Interest free loan or loan without security lent to any person referred to in Section 13(3) for any period during the previous year without either adequate security or adequate interest or both.
2. Use of properties without charging adequate rent of the trust or institution is made available or continues to be, for the use of any person referred to in section 13(3) for any period during the previous year. Letting out of trust property to an interested person is a violation. Where the trust property is let out to a partnership in which the trustee was a partner for a meager rent, there is clear violation of the requirements of section 13(2)(b), so that the trust has to lose its exemption.

For the purposes of section 13, the following are interested persons:

1. the author of the trust or the founder of the institution;
2. any person who had made a total contribution (up to the end of the relevant previous year) of an amount exceeding ₹ 50,000 (substantial contributor);
3. any member of the HUF (or any relative of such member) where such author or founder or substantial contributor is a HUF;
4. any trustee of the trust or manager (by whatever name called) of the institution;
5. any relative of such author, founder, substantial contributor, member, trustee or manager;
6. any concern in which any of the persons referred to above has a substantial interest.

Relative by virtue of Explanation-1 to Section 13 - “relative” in relation to an individual means:

1. spouse of the individual;
2. brother or sister of the individual;
3. brother or sister of the spouse of the individual;
4. any lineal ascendant or descendant of the individual;
5. any lineal ascendant or descendant of the spouse of the individual;
6. spouse of a person referred to in (b), (c), (d) or (e) above;
7. any lineal ascendant or descendant of a brother or sister of either the individual or of the spouse of the individual.