The Finance Act 2020 introduced the new registration procedure for all the existing charitable and religious institutions (including NGOs) which are registered or approved. They are compulsorily required to switch to section 12AB for fresh registration in order to continue availing exemption under section 10 or 11, as the case may be.
CBDT vide Notification No. 30/2021 in S.O. 1443(E) dated 1.4.2021 has notified that the Director of Income Tax (Centralized Processing Centre), Bengaluru and Commissioner of Income-Tax (Exemption) is authorized to receive applications for registration/approval, grant registration/approval and cancel the same under new registration regime provided in section 12AB, section 10(23C) and section 80G.
As a result of which, Section 12AA which prescribes the registration process for the registration Trusts or Institutions will cease to exist and a new section 12AB will come into force
Comparison within old and new scenarios:
| Scenario (till 31st March 2021) | New Scenario (effective from 01-04-2021) | Impact |
| NGOs registered under 12A of Income Tax Act have the benefit of exemption from payment of Tax subject to fulfilling of some conditions (as 85% of receipt must be spent). As of now, a Trust, Society or Association, registered u/s 12A and has exemption u/s 12AA and 80G, these benefits are available for life. | All NGOs presently having exemption u/s 12AA of the IT Act shall have to reapply for the same from Apr 1, 2021. | Burden on presently exempted NGOs to reaffirm their activities and credentials to the satisfactions of IT authorities. Check on NGO to avoid misuse of special status and funds. |
| Exemption once given is valid for the future, until and unless the department specifically feels the need to review it. | Once awarded, the exemption shall be valid for a period of 5 years only, after which the NGO shall have to re-apply for exemption. | NGOs shall have to provide evidence to and convince Income Tax authorities of the bona fides of their activities every 5 years, in order to retain their tax exemption |
| Newly registered NGOs enjoy the benefit of exemption u/s 12AA on a continuous basis | Newly registered NGOs getting exemption u/s 12AA for the first time shall have to renew/ reapply for the same after 3 years and thereafter every 5 years | New entities will be benefited because there was always issue to convince authorities without past record, will get one time registration for 3 years. Consistency of activities and bona fides have to be proven by new NGOs sooner than existing ones. |
| Donor wise details required only for overseas contributions/ donations | Donor-wise details to be maintained and all donors will have to be given a certificate Prescribed form are 10BD & 10BE | Additional Administrative and Reporting burden on NGOs |
Documentation required for reapplication:
| Particulars | Income Tax Act | Additional requirements under Companies Act |
| Form Documents | Form 10A Copy of Constitution of entity i.e Registration Certificate and MOA /Trust Deed/Society registration or as applicable,Self-attested by the Managing Trustee,NOC from the Landlord/Owner of the property, where registered office is situated, Copy of PAN card of Trust.Electricity Bill/ House Tax/ Water Bill,Note on activities of the trust along with the supporting documents for last 3 years or since inception.Books of Accounts, Balance Sheet, ITR (if any) since inception or last 3 yearsList of Donors with their PAN and address.Details of the Trustees /Governing body/ Institution members : NameAddressAadhaar No.PANMobile No.Email idAny other information / document as required by the Income Tax Department | Form CSR 1 List of the CSR activities undertaken in last 3 years DIN of Governing Body Members (Trustees or Member of Societies)Copy of Registration Certificate.Board resolution authorizing the selected member/trustee to sign the formCertificate of Chartered Accountant |
Registration Time Limits:
There are different time limits for registration under different categories which can be summarized below:-
| S.No. | Category | Time Limits |
| 1. | Institutes already registered under section 12A or 12AA or having certificate under section 80G | From 1st April 2021 |
| 2. | Institutes who have obtained registration under section 12AB | 6 months prior to the expiry of tenure of 5 years |
| 3. | Institutions that have provisionally obtained registrations under section 12AB | Earlier of : 6 months prior to the expiry date of the provisional registration OR Within 6 months of the commencement of its activities |
| 4 | Where institutions have modified the objectives | Within 30 days from the date of such modifications |
| 5 | In any other case | At least one month prior to the commencement of the previous year. |
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