The Income Tax Department has notified a new set of rules and forms for trusts and non-profit organisations. Registration under these rules will help these organisations to get tax exemption for their own income. Also, the new rules will help in attracting funds where contributors will get exemption.

The Central Board of Direct Taxes (CDBT) has come out with a specific format of application to grant the approval of a fund, trust, institution, university, any hospital or other medical institution under various provisions of section 10.

As per the provision, mentioned in this section, there are incomes from certain funds, universities, educational institutions, hospitals, etc, that are not included in the total income for the taxation purpose.

The notification has also stated the rules are related to the approval of the institution for the fund under various provisions of Section 80G. Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G of the Income Tax Act. All donations, however, are not eligible for deductions under section 80G. Only donations made to the prescribed funds qualify as a deduction. These funds and institutions have been defined in the notification.

Sanjoli Maheshwarri, Director at Nangia Andersen India said the CBDT has finally issued a notification about amendments in the IT Rules and Forms for granting the approval to various non-profit organisations , under section 80G(5). Notably, the amendments were enacted through Finance Act 2020 wherein compliance and registration procedure for such entities were entirely revamped.

However, the required rules and forms to be prescribed got delayed given the nationwide pandemic crises. The rules and forms prescribed in the said notification indicates the procedure and details to be complied in the applicable forms for seeking registration of charitable & religious entities, hospitals, schools, scientific and industrial research organisation by DSIR, etc.

The newly notified forms are comprehensive and detailed as compared to the earlier forms requiring certain key details to be filled in the applications. “As per Section 12A, the requirement for registration has been mandated for all the existing registered entities under12AA as well as for the new entities seeking provisional registration. Further, the timeline to file the application for provisional registration was at least one month prior to the commencement of the previous year from which the said registration is sought,” Maheshwari said.

However, considering the said notification has been issued on the verge of year end and the timeline for filing the application for seeking provisional registration has already lapsed, it has been provided that for applications filed during previous year on or after April 1 2021, the provisional registration sought shall be effective from AY 2022-23. “With this clarification, the Government has helped in removing various concerns and anxiousness of the concerned entities who were in dilemma and perplexed as to how to proceed and strategize in the absence of forms notified,” she said.

Related Topics
comment COMMENT NOW