A change in laws surrounding the registration, verification and approval of trusts and charities under the Income Tax Act of 1961 was introduced by the Income Tax Department through the Finance Act of 2020 and 2021. Hence, sections such as Section 12A, section 12AA and section 12AB were added to make taxation and claim processes efficient and convenient.
Effective as of 1st April, 2022, trusts were required to update their mechanics from Section 12AA to the provisions and rights stated in the Section 12AB. The aforementioned trusts are classified into two categories: public trusts and private trusts. Furthermore, this categorisation thins down to public charitable trusts and public religious trusts.
Hence, a new, updated form was introduced which consists of 21 points in total and as a tax-paying and law-abiding citizen, it is imperative for you to learn as much as you can about the various sections and forms such as Form 10A of Income Tax Act of 1961, including section 12A.
Previously, forms such as Form 10 and Form 10G were rendered ineffective and instead replaced with an updated Form 10A which was equipped with a total of 21 points. Form 10 fundamentally served two purposes: approved trusts can use Form 10A of Income Tax Act online for re-registration while newly formed trusts can utilise Form 10A for trusts or charitable organisations’ provisional registrations.
For trusts applying for fresh registrations or approvals, the application is to be submitted 13 months prior to the upcoming assessment year. For example, you will be required to submit your application in March 2023 to be able to acquire approval or disapproval in April 2024. Should the application receive a stamp of approval, a provisional registration will be provided, however, it will expire after 3 years. Hence, the trust is required to apply for permanent registration at least 6 months before the closing of the provisional registration period.
In case of permanent registrations, the approvals will be valid for 5 years until re-registration will have to be made. The registration renewal application needs to be submitted 6 months before the completion of the 5-year duration of the previous permanent registration.
The six sections of Form 10A require you to fill essential information and data surrounding previous registrations, constitution, incorporation, key entities involved, assets and liabilities, religious activities and income.
You can fill this form online wherein each section has to be selected one at a time and completed subjectively. It is of utmost importance for you to save the data once each of the 6 sections are thoroughly completed.
The information to be entered in the constitution and incorporation section of the form, you are required to add the date of the inception date or registration date of the institution or trust.
The Income Tax Department has launched a new portal for e-filing your ITR forms and for the submission of related documents where you can fill Form 10A in the new income tax portal. In order to fill form 10A of Income Tax Act online, you can directly log into the portal without the hassle of manually filing for Section 12A at the Income Tax Department. Given below are the steps that chalk out the journey you can expect to take during your e-filing process.
Step 1: Visit www.incometax.gov.in in order to log into the Income Tax portal.
Step 2 : Click on ‘e-File’.
Step 3 : Select ‘Income Tax Forms’.
Step 4 : Choose ‘File Income Tax Forms’.
Step 5: Select ‘Persons not dependent on any source of income (source of income not relevant)’.
Step 6 : Choose the ‘File Now’ option under Tax Exemption and Relief Form 10A.
Step 7: Fill in all the required details and submit all essential documents.
Step 8: Pick the assessment year from the dropdown.
Step 9: Select ‘Continue’ and then select ‘Let’s Get Started’ to fill the form.
Step 10: Enter a digital signature or an electronic verification code and submit the form.
Form 10A of Income Tax Act requires you to attach certain self-attested copies of documents along with the complete form. Following is a list of all those essential documents.
Certificate of Registration
Digital signatures from a trustee
Foreign Contribution (Regulation) Act certificate
Two copies of a Trust Deed/Memorandum of Association
PAN card and Aadhaar card of managing trustees
Current 80G, 12A and 12AA certificates
Annual account since the year of inception (income and expenditure proofs, payment accounts, balance sheet, etc).
Form 10A for trusts, NPOs, NGOs and other section 8 companies can be used to apply for provisional registration or permanent registration under Section 12A of the Income Tax Act of 1961. All trusts and charitable/religious organisations can claim full tax exemptions under this section. This also includes educational institutions and medical institutions.
Section 12A of the Income Tax Act grants religious trusts, charitable organisations, NPOs and NGOs, and other Section 8 institutions special tax exemptions and allows them to claim deductions should they be registered lawfully under Section 12A. This is to promote charitable activities for the betterment of the society and the country at large and hence, through such exemptions, support is extended to trusts and charitable institutions.
Since the total earnings of the trust are invested into the mechanics of the trust, the income earned is exempted from certain taxes.
Section 12A allows the trust to save about 15% of the revenue for charity or religious activities.
Through this section, registered trusts are eligible for private and government grants.
Registrations made under 12A will remain active until cancellation.
According to Section 12A of the Income Tax Act, the following entities are eligible for Form 10A online filing and qualify for provisional or permanent registration.
Section 8 companies such as NPOs
However, there are strict rules that don’t allow certain organisations to qualify for permanent or provisional registrations under this section. These organisations can include private societies, family trusts, etc.
In addition to the documents required for Form 10A online filing, Section 12A requires documents to be furnished as a strict necessity. Those documents are as follows.
A self-attested copy of an entity or instrument that allowed the establishment of the trust or organisation.
A self-attested copy that proves the existence and establishment of the trust, institution or organisation.
A self-attested copy of the registration filled with the Registrar of Firms and Societies, Registrar of Companies, or Registrar of Public Trusts.
A self-attested copy of evidence or documents that record the modification or incorporation of objects.
Self-attested copies of yearly accounts of the prior year(s).
A list of activities undertaken by the trust.
Self-attested copy of current statement which allows the trust registration under Section 12AA or 12A.
If applicable to you, self-attested copy of a statement of rejection for registration allowance under Section 12AA or Section 12A.
You can find form 10A for trusts at an Income Tax Department Office or on their new portal at www.incometax.gov.in. This portal will allow you to complete your forms and complete the submission of all essential documents from the comfort of your home.
Form 10A is one of the forms a trust or charitable organisation such as NPOs and NGOs are required to submit to the Income Tax Department in order to access their right to the provisions stated under Section 12A.
Yes, a memorandum of association is a necessary document you are required to attach with Form 10A. However, you may provide a trust deed instead.
Section 8 organisations cover all those institutions whose mission, vision and values are deeply rooted in the welfare of society and the betterment of the country at large. This could include educational institutions, NGOs, NPOs, climate/environmental welfare organisations, etc. Section 8 societies are essentially considered trusts or charitable organisations.
Yes, it will. Since educational institutions can readily claim eligibility under Section 12A, universities are eligible for tax exemptions and deduction claims as per the Income Tax Act of 1961 under this particular section.