Revised registration process for trusts or Institutions or educational or medical institutions covered by section 10(23C)
Major changes have been brought by the Government in the recent past as regards the registration process of trusts or institutions or educational or medical institutions governed by section 10(23C) of the Income Tax Act, 1961. The existing Rule-2C of Income Tax Rules, 1962 has been substituted by new Rule-2C by which the registration process of certain institutions covered under section 10(23C) has been completely refined.
According to the new Rule-2C, Fund or trust or institution or university or educational institution or hospital or other medical institutions under clause (i) to (iv) of first proviso to clause (23C) of section 10 shall be required to file application in Form No. 10A/ Form No. 10 AB. On filing of such application, the approval shall be granted for a period of 5 years. After that, the institution shall have to apply for renewal for the registration. Even institutions who are already approved under existing provisions shall also have to re-apply within 3 months from 1st April, 2021.
What is the time limit for making application in Form 10A/10AB
|
Category of Entity |
Time limit for filing application for registration |
Applicable Form |
Time limit for passing order |
|
Clause- (i): Existing trusts/institution who are already approved under Income Tax Act |
Within 3 months from 1st April, 2021 i.e. up to 30th June, 2021 |
Before expiry of 3 months from the end of the month in which the application is received |
|
|
Clause- (ii): Trusts/ Institutions approved under newly inserted Rule |
Atleast 6 months before the expiry of the period of approval |
Form 10AB |
Before expiry of 6 months from the end of the month in which the application was received |
|
Clause- (iii): Trusts/ Institutions who are provisionally approved under new Rule |
Atleast 6 months before the expiry of such approval period |
Form 10AB |
Before expiry of 6 months from the end of the month in which the application was received |
|
Clause- (iv): In any other case (See Note) |
Atleast one month before the commencement of the Financial year for which approval is sought |
Before expiry of 1 month from the end of the month in which the application was received |
Note:
A question comes to our mind that what will be the legal status of those applications which has been made in the existing rules and are still pending on 31st March, 2021. In this regard, it must be noted that all such applications which are made under the existing rules and which are pending before PCIT or CIT as on 31st March, 2021, shall be deemed to be an application made under clause (iv).
What are the document to be filed with Form 10A/10AB
- Copy of instrument creating or establishing the entity i.e. trust or institution
- If an entity is created otherwise than under an instrument, then copy of such document evidencing creation or establishment of the entity
- Copy of registration with ROC or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be
- Copy of registration under FCRA, if the application is registered under the FCRA, 2010
- Copy of existing order of approval under section 10(23C)
- Copy of order of rejection of application for grant of approval under section 10(23C), if any
- In case of existing entities, copies of annual accounts of 3 years immediately preceding the year in which the application is made
- Where the income of the entity includes profits and gains of business as per the provisions of sub-section (4A) of section 11, copies of annual accounts and audit report u/s 44AB for 3 years immediately preceding the year in which the said application is made
- Notes of activities of the applicant
All the above documents should be SELF-CERTIFIED. In addition to above documents, details of all authors/ founders/ settlors/ trustees/ Members of Governing body/Member of Society/ Directors/ Shareholders holding not less than 5% shareholding shall also be furnished in the Form 10A/10AB. If PAN and Aadhar of the above persons are available, then details of PAN and Aadhar should be furnished. If PAN and Aadhar is not available, you may also furnish Voter ID number, Passport number or Driving License Number of the above persons.
Is Digital Signature required for filing Form 10A/10AB
- If Return of Income is required to be furnished under digital signature: - Form 10A/10AB shall be furnished through digital signature
- In other cases: - through electronic verification code
Who shall verify the Form 10A/10AB
Form 10A/10AB shall be verified by the person who is authorized to verify the return of income of trust or institution u/s 140 of the Income Tax Act.
Who shall pass order for approval under section 10(23C) for an application made in Form 10A
- On receipt of application in Form 10A, the PCIT or CIT shall pass an order granting approval in Form No. 10AC and
- A 16-digit Alphanumeric Unique Registration Number (URN) shall be issued at the time of approval
Can order of approval granted under section 10(23C) be cancelled
- If at any point of time, it is noticed that Form 10A has not been duly filled or by providing false or incorrect information or documents, the PCIT or CIT may cancel the approval granted in Form No. 10AC
- However, an opportunity of being heard shall be given before cancellation
- On cancellation, it shall be deemed that URN had never been granted or issued
For details read:- Notification dated 26th March 2021
