Trust registration as per Income Tax Act 1961

Today we have discussed details of Trust registration as per Income Tax Act 1961.Section 12A of income tax act 1961 relates to Trust registration as per Income Tax Act 1961 and section 80G is related to application of trust for getting exemption certificate. Both applications can be applied together or if any entity wants to apply differently application for 12A need to be applied first and than application for 80G can be made.Application for 12A Trust registration as per Income Tax Act 1961 can be made using 10A form which is prescribed in rules 17A of the Income Tax Rules 1962.

Trust registration as per Income Tax Act 1961
Trust registration as per Income Tax Act 1961
Trust registration as per Income Tax Act 1961

Following are the steps for applying 12A registration:

  1. Application for Trust registration as per Income Tax Act 1961 is required to be made to jurisdictional principal commissioner or commissioner of income tax(Exemptions) in form 10A.
  2. Following is the checklist of documents required for 12A Trust registration as per Income Tax Act 1961:
    1. Self attested photocopy of instrument or trust deed.
    2. Self attested photocopy of registration with Registrar of Public Trust or Registrar of companies(ROC) or Registrar of firms.
    3. Self attested photo copies of the annual accounts for 3 years immediately preceding the year in which Trust registration as per Income Tax Act 1961 application is made.
    4. Activities of the trust or institution.
Process for filing form 10A:
  • Form 10A as per rule 17A is required to be furnished electronically using digital signature if return of income is required to be filed electronically.It is required to be signed by the person using digital signature who is authorised for filing ITR using digital signature as per section 140.
  • If above is not applicable than form is required to be filed using electronic verification code.
Trust registration as per Income Tax Act 1961 process of 12A as per section 12AA.
  • On receipt of application principal commissioner or commissioner shall:
    • Require and call for documents or information as required to satisfy himself about:
      • Genuineness of activities of the trust or institution and
      • Compliance of requirements as are necessary for achieving the objects of the trust and also he may make other inquiries as he may deem necessary in this behalf.
    • Pass order as follows:
      • Pass order of registering the trust in writing
      • Pass order refusing Trust registration as per Income Tax Act 1961 of the trust in writing if he is not satisfied.
Note:No order shall be passed of rejection without giving reasonable opportunity of being heard to the applicant.
 
Deemed registration: Trust shall be deemed to be registered if order is not passed by the commissioner within six months from the end of the month in which application is made as per case law supreme court held on 16/02/2016: “CIT vs. Society for The Promotion of Education, Adventure Sport & Conservation of Environment”
 
Following are the conditions to be satisfied for getting approval of trust under section 80G:
  •  Institution must be established for charitable purpose in India.
  • If institution is deriving any income such income should not be liable to be included in section 11 or 12 or in clause 23C clause 23AA of section 10.
  • There is exception that income should not be included in provisions of section 11 is as follows:
    • For purpose of such income of business,donation should not be used.
    • Trust or institution issues certificate to that effect that,trust does not uses such donation for business and keeps separate books of accounts for such business.
    • The institution or trust maintain separate books of account for the business.
  • There should be provision in the deed or document of the trust that income or asset of the trust should be used only for charitable purpose and should not be used for any purpose other than charitable purpose.
  • Institution or trust should not be formed for benefit of the particular religious community or caste.  
  • Regular books of accounts is required to be maintained for its receipt and expenditure.
  • Institution or trust should be registered under companies act as per section 8 or should be incorporated as society or should be registered trust or university established by law or any other educational institution recognized by government or institution financed wholly or partly by government.
Below is the process for registration of trust or institution under section 80G:
  • Form 10G as per rule 11AA is required to be furnished electronically using digital signature if return of income is required to be filed electronically.It is required to be signed by the person using digital signature who is authorized for filing ITR using digital signature as per section 140.
  • If above is not applicable than form is required to be filed using electronic verification code.
  • On receipt of application principal commissioner or commissioner shall:
    • Require and call for documents or information as required to satisfy himself about:
      • Genuineness of activities of the trust or institution and
      • Compliance of requirements as are necessary for achieving the objects of the trust and also he may make other inquiries as he may deem necessary in this behalf.
    • Pass order as follows within six months from the end of the month in which is application is made,time taken by applicant for complying with the direction will be excluded:
      • Pass order of registering the trust in writing
      • Pass order refusing registration of the trust in writing if he is not satisfied.
Note:No order shall be passed of rejection without giving reasonable opportunity of being heard to the applicant.
 
Thus above is the process for Trust registration as per Income Tax Act 1961.
 
Owner of this information can be reached at K M GATECHA & CO LLP.

Important note: This does not lead to legal advice or legal opinion and is personal view and for information purpose only. It is prepared on  the basis of facts available and applicable law.It is suggested to go through applicable provisions of law,latest regulations,judicial announcements, circulars, notifications and clarifications  etc before taking any action based on above content.You agree here by that for any action taken on basis of above information in any manner writer or K M GATECHA & CO LLP is not responsible or liable for  any omission,reliability,accuracy,completeness,errors or authenticity.This work by professional is just for knowledge purpose and does not constitute any kind of  solicitation of work or advertisement.