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Q) Is it mandatory for a trust to be registered?
Ans) Under section 12AB of the Income Tax Act, 1961, it is mandatory for a trust to get registered so as to claim exemption under section 11.
Q) Which form is required to be filed for registration of trust under the Act?
Ans) Form No 10A is required to be filed for registration of a trust
Q) What are the benefits of the 12AB registration?
• the funds used for religious, charitable, religious cum charitable, education, medical relief, yoga, relief of poor purpose is considered to be application of income
• Any firm which is registered under Section 12AB can avail benefits of setting aside and accumulating of income. However, the income which is set aside should not be more than 15% of the gross receipt.
The application for registration or intimation or approval under Section 10(23C), 12A or 80G of the Act in Form No. 10A required to be filed on or before 30th June, 2021, as extended to 31st August, 2021. The due date has been further extended to 31st March, 2022.
|Case||Scenario||Time limit for making application||Time limit for grant of registration||Period of registration|
|1.||Existing Trusts already registered u/s 12A/12AA||3 months from the date on which this amendment come into force||3 months from the end of month in which application was received||5 years (without inquiries)|
|2.||New Trust applying for fresh registration u/s 12AB Provisionally||1 month prior to the commencement of PY relevant to AY for which registration is sought||1 month from the end of month in which application was received||3 years (Provisional Registration) (without inquiries)|
|3.||Trust granted provisional registration now applying for final registration||6 months prior to expiry of approval or 6 months from the commencement of activity whichever is earlier||6 months form the end of month in which application was received||5 years (From AY for which provisional registration granted) (with inquiries)|
|4.||New trust to registered u/s 12AB||6 months prior of expiry of registration||6 months from the end of the month in which application was received||5 years (with inquiries)|
Exemption u/s 11 & 12 available if-
a) Trust should be registered u/s 12AB/12AA
b) If total income (before claiming exemption) is more than the Basic Exemption Limit, then audit report from Auditor should be furnished.
1. CIT/PCIT on receipts of application shall call for documents or information and satisfy himself about the genuineness of activity of trust and compliance of such requirements and other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects
2. After satisfying he may pass order for registration of trust or refusing registration or cancelled the registration (cancelled in case of provisional registration) within the given time.
3. Where registration is granted u/s 12AB but after that CIT/PCIT satisfied that:-
a. Activities of trust are not genuine or
b. Activities are not in accordance with the object or
c. Trust not complied with the requirements of other law or
d. Section 13(1) applied[S. 13(1):- exemption under section 11 and 12 is not available if the trust has income from private religious purpose, income for the benefit of a particular case or community, income for the benefit of relatives and if the funds are not invested in specified funds under section 11(5)]
He may cancel the registration after giving a reasonable opportunity of being heard
A trust is registered under section 12AB of the Income Tax Act, 1961 after filing the Form 10A. One can file the form 10A online simply by visiting the E-filing website.
The steps to file Form 10A are:-
Step 1: First log on to portal of the income tax department https://incometaxindiaefiling.gov.in/
Step 2: navigate to the E-File menu located on the upper left side of the page and click on income tax forms
Step 3: Select for 10A from the list and select the relevant AY
Step 4: Click on let’s get started to start filling up the form
a) Fill up the incorporation or constitution details- these include the PAN, nature of activities, constitution type, registration or incorporation number, authority for granting registration etc.
b) Other registration details- Whether the applicant is registered under the DARPAN portal or under FCRA. Whether the applicant has been rejected in the past or not.
c) Details of key person- these include the details of all the Author (s)/ Founder (s)/ Settlor (s)/Trustee (s)/ Members of society, mobile number, email address, percentage of shareholding etc.
d) Details of Assets and Liabilities- has return of income been filed in the previous assessment year within the due date? The details of corpus, Long term liabilities, Land and Building, Funds/reserves and surplus other than corpus etc.
e) Income details- Income received in three previous years immediately preceding the previous year in which application is made. These include the grants received from central or state government, grants from companies under CSR, other specific grants, other incomes etc.
f) Religious Activities- Whether the fund or the institution has incurred any expenditure of religious nature? These include the total income, expenditure of religious nature, percentage to total income etc.
Step 6: Please verify all the details and file the form with DSC and click on submit to complete the process.
Along with the form 10A application, the following documents must be attached by the taxpayer:-
• Where the institution is established or trust is created, under an act or an instrument, self-certified copy of the instrument creating the trust or establishing the institution.
• Where the institution is established or trust is created, without an act or instrument, self-certified copy of the document evidencing the creation of the trust, or establishment of the institution
• 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.
• Note on activities of the trust or institution
• Self-certified copy of existing order granting registration under section 12A or section 12AA, as the case may be.
• Copy of the trust deed can also be attached with the form
• Where the trust or institution has been in existence during any year 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 (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made.
*(Exclusive of Government fees & taxes)
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