CBDT extended compliances date for new section 12AB and other Charitable Trusts procedures amid COVID-19

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.

Update:

New Registration Procedure under section 12AB Deferred and Extended to April 2021 from October 2020/December 2020

Also Read:

How to file Statement of Donation in Form No. 10BD

How to issue Certificate of Donation in Form 10BE

How to File Form 10A for Approval under Section 80G

Understanding Form 10A, Form 10AB, Form 10AC and Form 10AD for Section 12AB, Section 80G, Section 35, Section 10(23C)

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.”

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.#IndiaFightsCorona

— Income Tax India (@IncomeTaxIndia) May 8, 2020

The new compliances under the mentioned section were made applicable from June 1, 2020 and should have been completed by August 31, 2020. From the released information by way of tweet, the new date of compliances shall begin on October 1, 2020 and shall continue till December 31, 2020.

Read these articles further:

An Insight into Amendments for Charitable Trusts –Budget 2020

New Section 12AB to replace Section 12AA and Section 12A for Charitable
Trust and NGO Budget 2020

In this pandemic situation, it is the NGOs and other Charitable trusts which are playing an active role in the society and their contributions cannot be ignored right now. It is, therefore, of utmost importance to allow them to remain focussed in social activities rather than in compliances.

Please note that this information is shared by the Income Tax department by tweet only which is not a law. Hence, to have a legal effect of the time extension or deferment, a notification from the CBDT is required which may be expected soon.

Further Reading: Section 12AB: Amendments in Procedure for Registration of Charitable Trusts and NGOs

Update:

Ministry of Finance has on 9th May 2020 has released a press note in this regard and clarified that the necessary legislative amendments in this regard shall be proposed in due course.

Read the press note:

Ministry of Finance

New procedure for registration, approval, etc. of certain entities deferred to 1st October, 2020

Posted On: 09 MAY 2020

In view of the unprecedented humanitarian and economic crisis, the CBDT has decided that the implementation of new procedure for approval/ registration/notification of certain entities shall be deferred to 1st October, 2020. Accordingly, the entities approved/ registered/ notified under section 10(23C), 12AA, 35 and 80G of the Income-tax Act, 1961 (the Act) would be required to file intimation within three months from 1st October, 2020, i.e, by 31st December, 2020. Further, the amended procedure for approval/ registration/ notification of new entities shall also apply from 1st October, 2020. The necessary legislative amendments in this regard shall be proposed in due course. Various representations were received in the finance ministry expressing concerns over the implementation of the new procedure from 1st June, 2020 due to the outbreak of novel corona virus (COVID-19) and consequent lockdown. There have been a number of requests to defer the applicability of the new procedure. It may be noted that The Finance Act, 2020 rationalized the procedure relating to approval/ registration/ notification of certain entities referred to in sections 10(23C), 12AA, 35 and 80G of the Act, with effect from 1st June, 2020. As per the new procedure, the entities already approved/ registered/ notified under these sections would be required to file intimation within three months, i.e, by 31st August, 2020. Further, the procedure for approval/ registration/ notification of new entities has also been rationalized with effect from 1st June, 2020.

Download Copy of press note dated 09.05.2020 on deferment of the new procedure for registration, approval, etc. in pdf format.

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