Background
In India, existing Trusts were required to apply for registration/approval on or before 30 June 2021. However, on consideration of difficulties in the electronic filing of Form No. l0A, the Central Board of Direct Taxes (the Board) extended the due date for filing Form No. 10A in such cases to 25 November 2022 (Refer: Circular No. 22 of 2022 dated 1 November 2022). Such registration/approval are valid for a period of 5 years. Thus, existing Trusts are required to apply for fresh registration/approval and once the registration/approval is granted it is valid for five years.
New Trusts are required to apply for provisional registration/approval at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration/approval is sought. Such provisional registration/approval is valid for a maximum period of three years.
Provisionally registered/approved Trusts again need to apply for regular registration/approval in Form No. 10AB at least six months prior to the expiry of the period of provisional registration/approval or within six months of the commencement of activities, whichever is earlier. This registration/approval is valid for a period of five years.
Clarifications issued
On consideration of difficulties in electronic filing of Form No. 10AB the Board extended the due date for electronic filing to 30 September 2022 (Refer: Circular No 8 of 2022 dated 31 March 2022).
The Trusts once approved/registered for five years are required to apply at least six months prior to the expiry of the period of five years.
Deduction under section 80G of the Act in respect of a donation made by a donor to a fund or institution would be allowed to the donor only if a statement of such donations is furnished by the donee in Form 10BD. The certificate of such donation is required to be provided in Form No. 10BE. Further, Form No. 10BD and Form No. 10BE are required to be furnished on or before the 31st May immediately following the financial year in which the donation is received.
Finance Act, 2023 has, inter aIia, amended section 115TD of the Act, so as to provide that the accreted income of the Trusts not applying for registration/ approval, within the specified time, would be made liable to tax in accordance with the provisions of section 115TD of the Act. This amendment has come into effect from 01.04.2023 and therefore applies to assessment year 2023-24 and subsequent assessment years.
Extension of dates for filing
for Registration and Approvals
Several Trusts could not apply for registration/ approval within the required time due to genuine reasons. This led to rejection of applications simply on the ground that these were delayed.
In order to mitigate genuine hardship in such cases the Board has extended the due date of making an application till 30 September 2023 for both Forms 10A and 10AB.
The extension of due date as mentioned would also apply in case of all pending applications. Hence, in cases where the Trust has already made an application in Form No. 10AB but such application has been furnished after 30 September 2022 and where the Principal Commissioner or Commissioner has not passed an order before the issuance of this Circular, pending application in Form No. 10AB may be treated as a valid application. Also, in cases where the Trust had already made an application and the Principal Commissioner or Commissioner has rejected it only on account of delay, the Trust would be allowed to furnish a fresh application.
It has also been clarified that provisional registration of a Trust shall be effective from the assessment year relevant to the previous year in which the application is made and would be valid for a period of three assessment years.
for submission of Statement of Donation / Certification of donation
In consequence of the above, an extension has also been granted to the due date for furnishing of statement of donation / certificate of donation in respect of the donations received during the financial year 2022-23 to 30 June 2023.
for submission of Statement of Accumulation/Deemed Application
Finance Act, 2023 provides that Statement of Accumulation is required to be furnished at least two months prior to the due date of furnishing return of income.
The due date for furnishing the option for deemed Application of Income has been prescribed at least two months prior to the due date of furnishing return of income.
Now it has been clarified that the Statement of Accumulation would be required to be furnished at least two months prior to the due date of furnishing Return of Income so that it may be taken into account while auditing the books of account. However, the Accumulation/Deemed Application shall not be denied to a Trust as long as the Statement of Accumulation/Deemed Application is furnished on or before the due date of furnishing the return.
One of the conditions required to be fulfilled by the Trusts to be eligible to claim exemption is that where the total income of any Trust exceeds the maximum amount which is not chargeable to income-tax in any previous year, it is required to get its accounts audited.
It has also been clarified that account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account would be acceptable as mode of payment of taxes in addition to UPI and electronic transfers.
From the Aureus Law Partners’ research desk. Published on 29 May 2023.
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