Re-registration u/s 12AB for all Trust & NGO: –
- All NGO’s need to register again with the Income Tax Authority within 3 months from 1st June 2020.
- If such applications is not made then already granted earlier registrations shall stand canceled on the expiry of 3 months.
- New Registrations will be valid for 5 years from the date of registration and it needs to be renewed again 6 months before the expiry of a period of 5 years.
All the NGOs, charitable trusts, section 8 companies, etc need to register again with the Income Tax Authority within 3 months from 1st June 2020. All such existing NGOs, charitable trusts, section 8 companies have to apply for re-registration of 12A (with effect from 1st June 2020). It has been introduced in the Budget that all current and existing trusts or foundations which are registered under Section 12A or under Section 12AA of the Income Tax Act, shall be compulsorily required to make a new application and such trust or institution should obtain registration under section 12AB. Such an application has to be done within 3 months commencing from 1st June 2020. Registration shall be granted by the Principal Commissioner by passing an order within a period of three months from the end of the month in which the application was accepted and such registration ought to be valid for 5 years.
If such an application is not made then already granted earlier registration shall stand canceled on the expiry of 3 months i.e. 31st August 2020. If the registration gets canceled then, such trust or institution shall not be eligible for claiming exemption in respect of its income under section 11 of the Act. It might be noticed that as per section 115TD of the Act, such trust or foundations will be required to pay tax on the total fair market value of the total assets or resources of the trustor foundations as on 31st August 2020 which outpace the total liability of such trust on that date. The tax payable on such value shall be at the most extreme marginal rate. Further, now onwards a trust or institution will be required to apply for re-registration at least six months prior to the expiry of the period of registration of 5 years.
Re-Approval u/s 80G for all Trust & NGO:
- All existing NGO’s, charitable and religious institutions which are registered or approved under section 12A, 12AA, 10 (23C), 80G are compulsorily required to switch to section 12AB for fresh registration.
- Presently, hospitals, schools, and colleges are registered simultaneously under section 10(23C) and 12AA. Charitable trusts and institutions currently registered under section 10(23C) and 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.
All the trusts and NGO’s which as of now have 80G approval need to get it once again within 3 months from 1st June 2020. In short, approval under Section 80G has to be obtained once again with effect from 1st June 2020. It is provided that all existing trusts or institutions which have obtained approval under section 80G of the Income Tax Act shall be compulsorily required to make a new application and such trust or institution ought to acquire approval under section 80G once again. Such an application is to be done within 3 months commencing from 1st June 2020. Such new approval under section 80G shall not be for perpetuity but for a period of 5 years only and has to be applied again at least 6 months prior to the expiry of the period of registration.
All Donations reporting to Income Tax Authorities
- It is now compulsory for an NGO, Trust, Society, Foundation, Institution, etc charitable or religious to file annual statements of donations from 1st June 2020.
- Every trust or foundation approved under section 80G to file a statement of donation received and also to issue the certificate to the donor.
- Deduction to the donor under section 80G can be allowed only on the basis of the statement filed by the done trust or institution.
- In case of a delay in filing such a statement, a late fee shall be applicable to Rs. 200 per day along with the penalty of Rs. 10,000 to Rs. 100,000/-.
Donors will obtain deduction only based on the return filed by trusts, NGOs. It means that it will be almost similar to like 26AS TDS credit. There is an obligation on Trust or Institution to file the Annual Statement of Donation w.e.f. 1st June 2020. Each and every trust or foundation which is approved under section 80G to file a statement of donation received and furthermore to issue the certificate to the donor. Deduction to Donor under section 80G can be allowed only on the basis of the statement filed by the donee trust or institution. Most important, in case of delay in filing such a statement a late fee of Rs.200 per day shall be applicable along with the Penalty of Rs. 10,000 to Rs 100,000/-
Re-registration if any of the objects is changed
If your trust or foundation has changed its objects then at that point additionally it has to re-apply for Income Tax Registration. Such an application for re-registration to be made within 30 days in the case of a modification of the object w.e.f. 1st June 2020. Where the trust or foundation has received or undertaken amendments of its objects which don't fit in with the conditions based on which registration was allowed earlier, at that point such trust or foundation need to apply once more for registration within a period of 30 days from the date of said alteration or modification.
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