As we are all aware that, Charitable Organisations registered with the Income Tax Department must take fresh registration in accordance with the provisions of section 12AB, which was introduced by our Finance Minister in the Budget presented in 2020.
However, because of the prevailing circumstances it was deferred and was ultimately made effective from 01st April 2021. The rules framed for registration have been notified by the Central Board of Direct Taxes on 26th March 2021.
Let Us Take A Look At The Brief Summary Of The Said Rules Which Are As Under:
- The Application must be filed online in Form 10A/ 10AB along with supporting documents which are as under:
- Copy of Charitable Organisation Deed/ Registration Certificate (Other than Trust)
- Self-Certified copy of Certificate signifying the Authority under which the entity is registered.
- Self-Certified copy of Certificate under Foreign Contribution (Regulation) Act (FCRA)
- Self-Certified copy of existing Registration certificate under Income Tax
- Copy of Audited Annual Accounts of Last 3 Years (FY 2017-18, 2018-19 and FY 2019-20). We must also keep Provisional Accounts for FY 2020-2021 ready.
- Self-Certified copy of Modification or addition to objects of the Organisation.
- Brief Note on Activities carried out by Charitable Organisation.
- The Pr.Commissioner shall pass an order in Form 10AC and issue a sixteen-digit alphanumeric Unique Registration Number (URN).
- If the Application is made on or after 01st April 2021 the same shall be effective for FY 2021-2022.
What Are The New Provisions Related To The Filing Returns Pertaining To Donations Received By Charitable Organisations?
With regards to the issue of a certificate to the Donor by Charitable Organisation and filing of return pertaining to a donation received is concerned, new provisions were introduced. They can be summarised as under:
- New Return of All Donations received by Charitable Organisations shall have to be furnished in Form 10BD.
- The Information shall have to be furnished in a Consolidated manner, with respect to each of the Donors. Hence, total donations received from a particular Donor in a year will have to be furnished.
For instance, suppose there are multiple branches and a person makes a donation at 4 separate branches, twice a year then in such a case, all the donations will have to be aggregated and the total amount received from such donor will have to be reported in Form 10BD.
- Accordingly, only one certificate shall have to be issued by Charitable Organisations to Donor in Form 10 BE specifying the amount received during the Financial year (multiple certificates are not required to be issued).
- Return under Form 10BD and Certificate of Donation under Form 10BE shall be furnished on or before 31st May, following the financial year in which the donation is received.
- Following details of Donor will have to Mandatorily be collected:
- Either PAN Card or Aadhar Card.
- If the same is not available, then Tax Identification Number issued by Country of Residence/Passport Number/Electors Photo Identity/Driving License Number/Ration Card Number.
- Type of Donation – Corpus/ Other than Corpus.
- Mode of Receipt – Cash/Kind/ Electronic Mode/ Others.
Since the change is effective from 01st April 2021 it is essential that all the care is taken while accepting donations from Donors and all the details as required to be uploaded in Form 10BD are collected from the Donor.
What Are The Timelines For Completing The Process Of Re-registration?
The Time- Lines for completing the above process of re-registration, as prescribed under the Act can be summarized as under:
- Existing Charitable Organisation (Making First Time Application under 12AB) –
- Application to be made: Within a period of 3 months beginning from 01st April 2021.
- Order to be passed: Within a period of three months.
- Validity: For a period of 5 years.
- New Charitable Organisation Incorporated
- Application to be made: On or Before 28th February preceding 01st April from which we intend to get the Exemption.
- Order to be passed: within a period of 1 month.
- Validity: For a period of 3 years
(As per Rules framed it has been stated that, registration shall be effective from the year in which application is made, which is a welcome move (even though the act does not provide for it). Thus in our view, the benefit shall be granted to new Charitable Organisation from the year in which application is made)
- Re-Registration/Switch from 10(23C) to 12AB or Modification of Objects –
- Application to be made: Within Six months before the expiry of the period.
- Order to be passed: within a period of six months.
- Validity: For a period of 5 years.
Why Choose Incorp?
The above-mentioned rules framed for registration have been notified by the Central Board of Direct Taxes on 26th March 2021. Re-registration of Charitable Organisations based on these new provisions is in effect from 1 April 2021. At Incorp, we have the expertise and skills to guide you through the entire process and thus maximizing outcomes for all the stakeholders.