{"id":9378,"date":"2020-03-06T08:30:15","date_gmt":"2020-03-06T03:00:15","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=9378"},"modified":"2020-07-03T11:34:39","modified_gmt":"2020-07-03T06:04:39","slug":"union-budget-2020-introduces-significant-changes-for-charitable-trusts","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/union-budget-2020-introduces-significant-changes-for-charitable-trusts\/","title":{"rendered":"Union Budget 2020 introduces significant changes for Charitable Trusts"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Union Budget 2020 has set some new <strong>compliance for Charitable Trust<\/strong>, NGO and religious institutions to claim tax exemptions. The revised provision will bring a pivotal change for such organizations. The existing Charitable Trusts and Institutions <strong>registered under Section 12A<\/strong> <strong>(before 1996), Section 12AA (after 1996), 10(23C)<\/strong> and <strong>Section 80G<\/strong> shall be required to <strong>re-apply under Income Tax to revalidate<\/strong> their existing Registrations. The proposal of approval and Registration of Trusts &amp; institutions will come into <strong>effect from 1<\/strong><sup><strong>st<\/strong><\/sup><strong> April 2020<\/strong>. This write-up will give exclusive information about the proposed regime and its impact on <strong>Charitable Trusts<\/strong> and other institutions. <\/p>\n\n\n\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link has-background\" href=\"https:\/\/swaritadvisors.com\/income-tax-return-filing\" style=\"background-color:#01669c\">Apply for Income Tax Return Today<\/a><\/div>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a32d17fa25db\" class=\"ez-toc-cssicon-toggle-label\"><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><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a32d17fa25db\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/union-budget-2020-introduces-significant-changes-for-charitable-trusts\/#Changes_in_the_Registration_approval_of_Charitable_Trust_and_Institutions\" title=\"Changes in the Registration &amp; approval of Charitable Trust and\nInstitutions\">Changes in the Registration &amp; approval of Charitable Trust and\nInstitutions<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/union-budget-2020-introduces-significant-changes-for-charitable-trusts\/#_Present_Regime\" title=\"&nbsp;Present Regime \">&nbsp;Present Regime <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/union-budget-2020-introduces-significant-changes-for-charitable-trusts\/#Proposed_Regime\" title=\"Proposed Regime \">Proposed Regime <\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/union-budget-2020-introduces-significant-changes-for-charitable-trusts\/#New_Charitable_Trusts_can_loop_onto_Provisional_Registration\" title=\"New Charitable Trusts can loop onto Provisional Registration \">New Charitable Trusts can loop onto Provisional Registration <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/union-budget-2020-introduces-significant-changes-for-charitable-trusts\/#Simultaneous_Registration_under_Section_12AB_and_1023C_is_not_permitted\" title=\"Simultaneous Registration under Section 12AB and 10(23C) is not permitted\">Simultaneous Registration under Section 12AB and 10(23C) is not permitted<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/union-budget-2020-introduces-significant-changes-for-charitable-trusts\/#Additional_Provisions_for_Trusts_registered_under_Section_80G\" title=\"Additional Provisions for Trusts registered under Section 80G\">Additional Provisions for Trusts registered under Section 80G<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/union-budget-2020-introduces-significant-changes-for-charitable-trusts\/#Union_Budget_has_extended_the_due_date_of_filing_ITR\" title=\"Union Budget has extended the due date of filing ITR \">Union Budget has extended the due date of filing ITR <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/union-budget-2020-introduces-significant-changes-for-charitable-trusts\/#Time_schedule_under_the_Proposed_Regime\" title=\"Time\nschedule under the Proposed Regime:\">Time\nschedule under the Proposed Regime:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/union-budget-2020-introduces-significant-changes-for-charitable-trusts\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Changes_in_the_Registration_approval_of_Charitable_Trust_and_Institutions\"><\/span>Changes in the Registration &amp; approval of Charitable Trust and\nInstitutions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Let\u2019s analyze the proposed modifications in the present regime:<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"_Present_Regime\"><\/span><strong>&nbsp;Present Regime <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul><li>Currently, <strong>Section 12AA and Section 12A<\/strong> prescribes the procedure to register for tax exemption for Trusts Registered before 1996. However, now it is proposed to be governed by <strong>new Section 12AB<\/strong>.<\/li><li>The present regime states that Registration <strong>granted under Section 12AA<\/strong> shall be valid unless the Authority cancels it.<\/li><li>Moreover, the Charitable Trusts are eligible for approval under <strong>Section 80G<\/strong> that enables its donors to avail tax exemptions on each donation. Such approval is valid unless cancelled by the Authority. <\/li><li>Educational Institution, Universities, Medical Institutions and Hospitals can claim <strong>tax exemption under Section 10(23C)<\/strong> after the approval of the Authority. Once the new compliance comes into force, the <strong>approval under Section 10(23C)<\/strong> shall be operative unless and otherwise cancelled by the Authority.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Proposed_Regime\"><\/span><strong>Proposed Regime <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul><li>The existing <strong>Registered Charitable Trusts<\/strong> and institutions have to re-apply for Registration under the new <strong>provisions of Section 12AB<\/strong> on or <strong>before 31<\/strong><sup><strong>st<\/strong><\/sup><strong> August 2020<\/strong>.<\/li><li>Presently, Registration is granted for a long period until and unless Tax Authority revokes it whereas, the <strong>new Registration<\/strong> will be granted only for a limited duration of five years. Now, <strong>Registration will be granted for a limited period of 5 years<\/strong>.<\/li><li>As per <strong>Section 10(23C)<\/strong> or 11, all Trusts or institutions will have to renew <strong>Registration and approval<\/strong> after every five years to claim an exemption.<\/li><li>When any <strong>Trust or institution modifies<\/strong> its objects, but the modifications do not conform to the terms of Registration. In this case, the Application must be made to the <strong>designated Authority<\/strong> within 30 days from the date of such change.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"New_Charitable_Trusts_can_loop_onto_Provisional_Registration\"><\/span>New Charitable Trusts can loop onto Provisional Registration <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <strong>Union Budget 2020<\/strong> has also proposed a <strong>new concept of Provisional Registration<\/strong> for the Trusts that have not already registered with the <strong>Income Tax Authorities<\/strong> or commenced any operations. Here are the provisions for the <strong>concept of Provisional Registration<\/strong>:&nbsp;&nbsp; <\/p>\n\n\n\n<ul><li><strong>Provisional Registration<\/strong> shall be valid for three years from the Assessment Year from which the Registration is needed.<\/li><li>It is proposed that the <strong>new Trusts and other institutions<\/strong> must apply to <strong>Principal Commissioner of Income Tax<\/strong> one month prior to the commencement of the previous year in which the Registration is required.<\/li><li>Provisionally Registered Charitable Trusts and other institutions must <strong>file an Application for 5 years<\/strong>. Registration must be either within <strong>6 months of commencement or at least 6 months<\/strong> before the <strong>expiry of 3 years<\/strong>. <\/li><li>It is perceived that <strong>Provisional Registration<\/strong> will be granted with <strong>minimum&nbsp;documents<\/strong> and lesser enquiry about the objects of a Trust.<\/li><li>In a nutshell, the new Charitable Trust or other institutions applying for the first time will not be <strong>granted full and final Registration<\/strong>, but they can avail only Provisional approval or Registration. Such <strong>Trusts may be granted Registration after proper verification of its activities<\/strong>. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Simultaneous_Registration_under_Section_12AB_and_1023C_is_not_permitted\"><\/span>Simultaneous Registration under Section 12AB and 10(23C) is not permitted<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Section 11&nbsp;of Income Tax Act, 1961<\/strong> mandates that <strong>Charitable Trusts<\/strong> and institutions can either claim <strong>an exemption under Section 10(23C)<\/strong> or <strong>under Section 11 and 12 of Income Tax Act, 1961<\/strong>. Thus, the Trusts and institutions are compelled to choose only one of the prescribed exemptions.<\/p>\n\n\n\n<p>Nonetheless, there are numerous Schools, Colleges and Hospital, which are leveraging the <strong>benefits of dual Registration under Section 10(23C)<\/strong> and <strong>Section 12AA<\/strong>. If an exemption is denied <strong>under Section 10(23C)<\/strong> to a Trust, then it can take the <strong>benefit of alternate exemption of Section 12AA<\/strong>. <\/p>\n\n\n\n<p>With the effect of <strong>Union Budget 2020<\/strong> <a href=\"https:\/\/en.wikipedia.org\/wiki\/2020_Union_budget_of_India\">[1]<\/a> , all the <strong>Charitable Trusts<\/strong> and other institutions that are currently <strong>registered under Section 10(23C)<\/strong> and <strong>Section12AA<\/strong> have to choose a single Section. Dual Registration under both is not permissible.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Additional_Provisions_for_Trusts_registered_under_Section_80G\"><\/span>Additional Provisions for Trusts registered under Section 80G<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>All the <strong>Charitable Trusts or institutions registered under 80G<\/strong> needs to submit a <strong>statement of donations received in the prescribed manner<\/strong>. The donors can only avail the <strong><a href=\"https:\/\/swaritadvisors.com\/12a-and-80g-registration\">benefits of 80G<\/a><\/strong> if the Charitable Trusts or institutes furnish the corresponding statement. Such institutes are subject to <strong>fine due to non-submission of the statement<\/strong>.&nbsp; <\/p>\n\n\n\n<p>Moreover, the donors (individuals\/Companies) who opts for a reduced rate of tax will not get deduction benefits under Section 80G .<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Union_Budget_has_extended_the_due_date_of_filing_ITR\"><\/span>Union Budget has extended the due date of filing ITR <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The new provisions have extended the due date for <strong><a href=\"https:\/\/swaritadvisors.com\/income-tax-return-filing\">filing of Income Tax Return<\/a><\/strong> for Charitable Trusts and other <strong>institutions from 30<\/strong><sup><strong>th<\/strong><\/sup><strong>&nbsp;September to 31<\/strong><sup><strong>st<\/strong><\/sup><strong>&nbsp;October<\/strong>.<\/p>\n\n\n\n<p>The Government of India also proposes to develop a National Register of all Religious Institutions and <strong>Charitable Trusts<\/strong>. Further, <strong>Income Tax Department<\/strong> shall <strong>issue a Unique Identification Number (UIN)<\/strong> to all charitable and <strong>religious institutions<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Time_schedule_under_the_Proposed_Regime\"><\/span>Time\nschedule under the Proposed Regime:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Following is the checklist of schedules that the Charitable Trusts must consider: <\/strong><\/p>\n\n\n\n<ul><li>&nbsp;The existing registered <strong>Charitable Trusts<\/strong> needs to <strong>re-apply for registration or approval on or before 31.08.2020<\/strong>.<\/li><li>New <strong>charitable Trusts<\/strong> that are applying for <strong>Provisional Registration<\/strong> have to file an Application at least 1 month before the commencement of operations.<\/li><li>For Trust that has been registered provisionally under the new regime has to make an <strong>Application within 6 months of business<\/strong> commencement or at least 6 months before the expiry of 3 years period (whichever is earlier).<\/li><li>Trusts with Registration for 5 years must apply a new Application at least 6 months before the <strong>expiry of 5 years Registration<\/strong> period.<\/li><li>Where the Trust has undertaken modifications or changed the objects clause, then the <strong>Trust must file an application within 30 days<\/strong> from the date of the said modification.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<div class=\"shadow4\">Financial Bill and Union\nBudget 2020 expect a revolutionary change. The new regime ensures\ntransparency and better accountability for Trusts of larger magnitude while it\ntends to be a tedious task for small Charitable Organizations. <\/div>\n\n\n\n<p class=\"text-left\"><b>Also, Read<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/input-tax-credit-under-gst-guide-on-itc-claim\/\">Input Tax Credit under GST<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Union Budget 2020 has set some new compliance for Charitable Trust, NGO and religious institutions to claim tax exemptions. The revised provision will bring a pivotal change for such organizations. The existing Charitable Trusts and Institutions registered under Section 12A (before 1996), Section 12AA (after 1996), 10(23C) and Section 80G shall be required to re-apply [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":9379,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[416,1],"tags":[663,713],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9378"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=9378"}],"version-history":[{"count":12,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9378\/revisions"}],"predecessor-version":[{"id":11412,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/9378\/revisions\/11412"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/9379"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=9378"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=9378"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=9378"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}