Analysis of Trust Registrations amendments in Finance Act-2020

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  • by July 30, 2020

Analysis of Trust Registrations amendments in Finance Act,2020

(By CA Vivek Maheshwari)

1. Re-Registration of Trusts (Registered u/s 12AA and 80G of the Income Tax Act, 1961)

  Every Charitable trust registered u/s 12AA or approved u/s 10(23C) will have to apply in a simplified form (yet to be notified) before 31/08/2020, failing which the registration   or the approval will get cancelled.

  • Once an existing trust is re-registered, the registration will be valid for a period of 5 years. At the completion of 5  years term, fresh application must be made at least 6 months prior to the completion of 5 years.

  • For fresh registrations, the trust must apply atleast 1 month prior to the commencement of the previous year for which the registration i saught.

  • On fresh registration, a provisional registration will be issued for a period of 3 years.After the commencement of charitable activities, the trust can apply for permanent approval, which will be valid for 5 years. If the application is already done in PY 2019-20, provisional registration will be granted.

  • New registration of trust is to be obtained u/s 12AB instead of 12AA.

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2. Some miscellaneous amendment for 80G in Finance Act 2020

  • The trust shall prepare a statement containing name, address, PAN of donor and furnish the same on Income Tax portal in the manner prescribed.

  • The same shall be auto populated in donor’s portal.Only after this can he claim deduction u/s 80G.

III.Documents required for fresh application to register trust u/s 12AA (Tentative list as asked by the CIT(E) from previous experience)

  • For preliminary application basic details, such as Name,Address, PAN,Aadhar etc.of all the founder trustee and digital signature certificate of the managing trustee.

  • After filing the application, you will receive a detailed questionnaire asking for various details given below within next 2-3 months on the registered email id of the founder trustee/ trust

IV. Tentative list of documents information asked / requested by the CIT(E)

  • Copy of Certificate of Registration of Trust with government authority.

  • Copy of Trust deed. (Certified English translation if not English).

  • Note on activities conducted since inception/during last Three years with documentary evidence.

  • Affidavit from all trustee regarding the irrevocability clause if the same is not mentioned in trust deed.

  • NOC from premise owner if trust place is rented / leased (Lease or  Rental agreement)

  • Books of Accounts along with Audit Report if any.

  • A declaration for ultimate beneficiary of the trust i.e. not a specific individual or group of individual but general public / society at large.

  • A declaration u/s 2(13) for the application of income to general public at large.

  • Undertaking u/s. 11(5) of the IT Act, 1961.

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Disclaimer- Views expressed here are personal views of author. It does not form any professional opinion. For more information we request you to seek advice from Professional. 

(Author is Surendranagar based Chartered Accountant presently holding full time certificate of Practice and assisting clients in the field of Auditing & Assurance, Direct Taxes, Indirect Taxes and liasioning work. His clientele includes various government departments, NGP sponsored schools and manufacturing industries. You can reach out to him on [email protected] )