Overview of 12AB Registration
The Finance Act, 2020 has made comprehensive alterations regarding the provisions related to Trusts and NGOs holding exemption u/s 11 or u/s 12 of the Income Tax Act, 1961. The amendments in the Finance Act are regarding with the following agendas, which are as follows
As per the amendment, to continue availing exemption under section 10 or 11, all the existing charitable and religious institutions registered under the following Sections 12A, Section 12AA, Section 10(23C), Section 80G are mandatorily required to change to section 12AB for fresh registration.
Note:- The new provisions will come into effect from 1st April 2021, as a result of which every trust or institution which are already in existence will have to mandatory renew the certificate granted under section 12A, 12AA, 80G, or section 35 to change it to section 12AB for fresh registration with the time duration of 3 months which is 30th June 2021.
However, in the case of new Trusts or Institutions, they will have to apply for registration under section 12AB of the Income Tax Act, 1961.
What are the Benefits of 12AB Registration?
The benefits of 12AB Registration are mentioned below
Help in Providing Electronic Database
Section 12AB was introduced to provide an electronic database.
To Remove Odds from Old Trusts
The trust registered under the old section however have misplaced their registration number, nor the Income Tax Department have any records of the same. By introducing Section 12AB, the work will be done electronically.
Avoiding Difficulty via Various Facilities
Due to non-commencement of any activities, newly formed Trusts are facing difficulties. Section 12AB has removed that the difficulties of the New trust by providing various facilities.
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Who are Eligible to take Registration under 12AB of the Income Tax Act?
To continue taking exemption under section 10 or 11, all the new and existing charitable and religious institutions (including NGOs) which are registered under the following section are compulsorily required to move to section 12AB for fresh registration, which are as follows
Also, various institutional trusts registered under section 10(23C) or section 12AA are required to renew their registration under section 12AB. Consequently, Section 12AA which stipulates the registration process for the Trusts or Institutions will cease to exist and a new section 12AB will come into force with effect from whichever is earlier
What Necessary Papers are Required for 12AB Registration?
Various necessary papers are required for registration under 12AB. The list of necessary papers required is mentioned below
What is the Registration Procedure for 12AB Registration?
The procedure for registration under Section 12AB of the Income Tax act 1961 is not defined as such. However, these steps are required to be followed
What is the Validity of Registration granted under Section 12AB?
The registration granted under section 12AB remains valid for 5 years. However, in the case of Provisional registration, it shall be valid for 3 years. All the registration granted under section 12AB shall be subject to renewal as determined under the new scheme of registration.
What is the Division of Registration under 12AB?
As per the current way of registration effect from 1st April 2021, the registration can be divided into the below-mentioned categories
CorpBiz Procedure for 12AB Registration
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Frequently Asked Questions
The registration of Section 12AB shall be valid for 5 years.
The Online application shall be made to the Commissioner or Principal Commissioner of Income Tax who shall pass an order granting approval or rejection within 3 months from the date of commencement of the new provision.
Yes. To claim an exemption under section 11, a trust must get the registration under section 12AB of Income Tax Act, 1961.
To claim an exemption for 80 G,the following details have to be submitted in the Income Tax Return
- Name of the recipient.
- PAN number of the recipient.
- Address of the recipient.
- Amount of contribution made.
Provisional registration has been introduced for granting income tax exemption to newly formed organizations that are planning to carry out charitable activities. Provisional registration is granted for3 years without conducting detailed inquiry by the department and even if the organization has not commenced its activities.
No, the process of 12AB registration is completely electronic mandatorily.
No, as per the new provisions a Unique Registration Number (URN) shall be allotted to the trust which implies that the previous registration number shall be void after 01.04.2021.
To avoid the discrepancies that occurred in the Old trust registration process ,the Finance Bill 2020, wants to consolidate all trust data to provide an electronic database.
To continue taking exemption under section 10 or 11 all the existing charitable and religious institutions (including NGOs) are compulsorily required to move to section 12AB for fresh registration which are registered under the following section-
- Section 12A
- Section 12AA
- Section 10(23C)
- Section 80G
The Provisional registrationshall be valid for 3 years.