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Income Tax Update/2020-21/01

SNR – Income Tax Update

Income Tax/2020-21/01

Finance Act 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
Section 12A, Section 12AA, Section 10(23C) and Section 80G are compulsorily required to switch to section
12AB for fresh registration.

Earlier, Finance Act 2020 provided that Charitable trusts and exempt institutions which are already registered
under section 12A or section 12AA of Income Tax Act, 1961 will now be required to re-apply online for
registration and approval by August 31, 2020. To give effect to the same, the 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 that are already registered under Section 80G will be
required to reapply online for registration or approval by August 31, 2020. The registration shall remain valid
for 5 years.

However, seeing the present situation, the CBDT has decided to give relief to the charitable societies. In lieu
of this, the Income Tax Department by way of press note released today i.e. 9th May 2020, stated that, 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.

Therefore, the time limit for new compliances under the mentioned section that were earlier made applicable
from June 1st, 2020 and scheduled to be completed by August 31st, 2020 have now been extended and
proposed to be made applicable from October 1st, 2020 and shall continue till December 31st, 2020.

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