{"id":6018,"date":"2020-04-03T14:11:54","date_gmt":"2020-04-03T08:41:54","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=6018"},"modified":"2020-10-01T14:41:59","modified_gmt":"2020-10-01T09:11:59","slug":"charitable-institutions-related-changes-12a-12aa-and-80g-budget-2020","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/charitable-institutions-related-changes-12a-12aa-and-80g-budget-2020\/","title":{"rendered":"Charitable Institutions Related Changes u\/s 12A\/12AA and 80G-Budget 2020"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In the Union Budget presented on <strong>1<sup>st<\/sup> February 2020<\/strong> by our Honorable Finance Minister, there have been dynamic and aggressive changes that relate to Charitable Institutions. The move is purely intended to curb tax evasion and bring transparency in the operations of Charitable Institutions. The government is keen to take strict measures to avoid any undue advantage taken by Charitable Institutions like Charitable Trusts, Societies, and <a href=\"https:\/\/corpbiz.io\/section-8-company-registration\"><strong><em>Section 8 Companies<\/em><\/strong><\/a> whose objective, in short, is to conduct charitable activities. The changes have come in for Charitable Institutions registered under <strong><em>12A\/12AA and 80G of the Income Tax Act<\/em><\/strong> and exempt institutions registered under <em><strong>section 10(23C) of the Income Tax Act<\/strong><\/em><sup><a href=\"https:\/\/www.incometaxindia.gov.in\/Pages\/i-am\/trust.aspx?k=Exemptions\"><strong>[1]<\/strong><\/a><\/sup>. The changes are majorly focused on the registration process through which exemption is granted.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/charitable-institutions-related-changes-12a-12aa-and-80g-budget-2020\/#Knowledge_Dashboard_%E2%80%93_Charitable_Institutions\" >Knowledge Dashboard \u2013\nCharitable Institutions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/charitable-institutions-related-changes-12a-12aa-and-80g-budget-2020\/#What_are_the_earlier_provisions_related_to_registration_under_section_12A12AA_and_80G\" >What are the earlier provisions related to\nregistration under section 12A\/12AA and 80G?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/charitable-institutions-related-changes-12a-12aa-and-80g-budget-2020\/#What_are_the_proposed_changes_in_Budget_2020_related_to_Charitable_Institutions\" >What are the proposed changes in Budget 2020\nrelated to Charitable Institutions?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/charitable-institutions-related-changes-12a-12aa-and-80g-budget-2020\/#Existing_Registrations_vs_Fresh_Registrations\" >Existing Registrations vs. Fresh Registrations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/charitable-institutions-related-changes-12a-12aa-and-80g-budget-2020\/#Notes\" >Notes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/charitable-institutions-related-changes-12a-12aa-and-80g-budget-2020\/#Other_Related_Changes_%E2%80%93_Charitable_Institutions\" >Other Related Changes \u2013\nCharitable Institutions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/charitable-institutions-related-changes-12a-12aa-and-80g-budget-2020\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Knowledge_Dashboard_%E2%80%93_Charitable_Institutions\"><\/span>Knowledge Dashboard \u2013\nCharitable Institutions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>What are the earlier provisions related to registration under section 12A\/12AA and 80G?<\/li><li>What are the proposed changes in Budget 2020 related to Charitable Institutions?<\/li><li>&nbsp;Existing registrations vs. Fresh Registrations.<\/li><li>Other related changes.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_earlier_provisions_related_to_registration_under_section_12A12AA_and_80G\"><\/span>What are the earlier provisions related to\nregistration under section 12A\/12AA and 80G?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Earlier,\nall the Charitable Institutions were granted registration under section 12A for\nthose who were registered prior to 1996 and under section 12AA for those who\nwere registered after 1996. There was no timeline or period of validity being\nprescribed for the Income Tax Department to grant registration to Charitable\nInstitutions. Once registration was granted, it was treated as for life unless\notherwise mentioned. The registration was canceled only in a certain scenario.\nRegistration <strong>under section 12AA<\/strong>\nimplies that Charitable Institution has a charitable objective, and therefore\nexemption was given from tax payment on complying with other conditions. Registration\n<strong>under section 80G<\/strong> is beneficial for\nthose who contribute some part of their income as donation to Charitable\nInstitutions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_proposed_changes_in_Budget_2020_related_to_Charitable_Institutions\"><\/span>What are the proposed changes in Budget 2020\nrelated to Charitable Institutions?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The\nmajor change is w.r.t period of validity of registration. <\/em><\/strong><\/p>\n\n\n\n<ul><li>Existing provisions of Section 10 are amended, and a\nnew section 12AB is proposed to be inserted w.e.f 01.06.2020.<\/li><li>The existing section 12AA will become inoperative, and\nsection 12AB is proposed to be operational w.e.f 01.06.2020<\/li><li>It is proposed that Charitable Institutions registered\nunder section 80G and section 35 shall issue <strong>a certificate of donation<\/strong> to the donor.<\/li><li>It is also proposed that such institutions registered\nunder section 80G and section 35 shall <strong>issue\ninformation return of donations received<\/strong> to the government, and that will\nbe cross-examined with the donor detail. With the technological developments\ntaking place, this is proposed to enhance the cross-verification of donation\ndetails disclosed by the donor and charitable institution. <\/li><li>Non-filing of the above statement would lead to late\nfees of 200 per day. Penalty may be also be imposed by the officer varying from\nRs.10000\/- to Rs 100000\/-<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Existing_Registrations_vs_Fresh_Registrations\"><\/span>Existing Registrations vs. Fresh Registrations<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<table class=\"table table-bordered\">\n<tbody>\n<tr>\n<td width=\"213\">\n<p><strong>Explanation<\/strong><\/p>\n<\/td>\n<td width=\"213\">\n<p><strong>Existing Registrations<\/strong><\/p>\n<\/td>\n<td width=\"213\">\n<p><strong>Fresh Registrations<\/strong><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"213\">\n<p>Time limit to file application<\/p>\n<\/td>\n<td width=\"213\">\n<p>Within 3 months starting 01.06.2020<\/p>\n<\/td>\n<td width=\"213\">\n<p>At least one month prior to the commencement of Previous year<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"213\">\n<p>Process of filing<\/p>\n<\/td>\n<td width=\"213\">\n<p>Online<\/p>\n<\/td>\n<td width=\"213\">\n<p>Online<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"213\">\n<p>Grant of Registration<\/p>\n<\/td>\n<td width=\"213\">\n<p>Within 3 months<\/p>\n<\/td>\n<td width=\"213\">\n<p>Within one month<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"213\">\n<p>Validity period<\/p>\n<\/td>\n<td width=\"213\">\n<p>5&nbsp; Years<\/p>\n<\/td>\n<td width=\"213\">\n<p>3 Years provisional registration at first<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"213\">\n<p>Application for Renewal of Registration<\/p>\n<\/td>\n<td width=\"213\">\n<p>To be filed at least 6 months prior to expiry of 5 years.<\/p>\n<\/td>\n<td width=\"213\">\n<p>To be filed at least 6 months prior to expiry of 5 years.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"213\">\n<p>Application of registration on income<\/p>\n<\/td>\n<td width=\"213\">\n<p>The income of assessment year for which approval was granted earlier<\/p>\n<\/td>\n<td width=\"213\">\n<p>Income of the following financial year in which application is made<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Notes\"><\/span>Notes<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Once provisional registration gets expired in case of\nfresh registration, it shall be granted again for 5 a period of 5 years.<\/li><li>It is sufficient enough to assume that at the time of\nprovisional registration, no in-depth examination of the activities of\nCharitable Institutions will be done.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Other_Related_Changes_%E2%80%93_Charitable_Institutions\"><\/span>Other Related Changes \u2013\nCharitable Institutions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>The concept of <strong>dual\nexemption<\/strong> under section <strong>12AA and 10(23C<\/strong>)\nis done away within this budget.<\/li><li>Charitable institution can now only opt for Section <strong>12AA<\/strong> exemption or section <strong>10 (23C)<\/strong> exemptions.<\/li><li>If any Charitable institution opts for exemptions\nunder <strong>10(23C) or 10(46),<\/strong> the\nexisting registration granted under section 12AA will become inoperative.<\/li><li>Since no change has been proposed in 10(23C), it\nimplies that once Charitable Institutions availing exemption under section 11\nand 12 of the act starts to avail benefits of exempt institutions,\nautomatically registration under 12AA \/12AB shall become inoperative.<\/li><li>If any <strong>modification<\/strong>\nis done in the <strong>object clause<\/strong> of the\nCharitable Institution, it needs to be reported to the Commissioner of\nIncome-tax <strong>within 30 days<\/strong> of modification,\nand on being satisfied with the objects of the Charitable Institution,\nregistration will be granted. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is sufficient enough to conclude that all these changes are being brought into to avoid any tax evasion and malpractices related to it. The time limit set for allotting the registration and specifying the validity period after the grant of registration is a welcome move. It shall rest many ambiguities which were their earlier. Also, the alignment of donations receipts is a good move to avoid any leakage in tax flow, but this may increase compliance cost on the part of Charitable Institutions.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/registration-of-ngo-in-india-under-12a-and-80g\/\">\nTax Exemption for NGOs: Section 12A &amp; 80G\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In the Union Budget presented on 1st February 2020 by our Honorable Finance Minister, there have been dynamic and aggressive changes that relate to Charitable Institutions. The move is purely intended to curb tax evasion and bring transparency in the operations of Charitable Institutions. The government is keen to take strict measures to avoid any [&hellip;]<\/p>\n","protected":false},"author":23,"featured_media":6019,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[153,3],"tags":[452],"acf":{"service_id":"10"},"authorName":"Siddharth Gambhir","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/sid.jpg","authorDescription":"Mr. Siddharth Gambhir is a Chartered Accountant by profession and also holding post-graduate degree in Finance and Taxation. He is an Advisory consultant at Corpbiz with experience in Taxation and Auditing.Holding experience in Taxation and Auditing, he holds keen interest in writing new content by updating himself with the latest changes.","postViews":40048,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6018"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=6018"}],"version-history":[{"count":11,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6018\/revisions"}],"predecessor-version":[{"id":17214,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6018\/revisions\/17214"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/6019"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=6018"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=6018"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=6018"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}