CBDT extends due date for renewal of registration by Charitable Trusts to 30.09.2023

In view of the  above, trusts may now apply for registration/approval under clause (i) or clause (iii) of  the first  proviso to clause (23C) of section 10 or sub-clause (i) or sub-clause (iii) of clause (ac) of sub-section (i) of section 12A of the Act by 30.09.2023 and where such application is made by the said date and registration/approval is granted, the provisions of clause (iii) of sub-section (3) of section 115TD of the  Act shall not apply on account of delay in making application in accordance with the provisions of clause (i) or (iii) of the first proviso to clause (23C) of section 10 or sub-clause (i) or (iii) of clause (ac) of sub-section (1) of section 12A of the Act.

It may be also noted that the extension of due date shall also apply in case of all pending applications under clause (iii) of the first proviso to clause (23C) of section 10 or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act, as the case may be. Hence, in cases where the trust has already made an application in Form No. 10AB under the said provisions but such application has been furnished after 30.09.2022 and where the Principal Commissioner or Commissioner has not passed an order before the issuance of this Circular, the pending application in Form No. 10AB may be treated as a valid application. Further, in cases where the trust had already made an application in Form No.10AB, and where the Principal Commissioner or Commissioner has passed an order rejecting such application, on or before the issuance of this Circular, solely on account of the fact that the application was furnished after the due date, the trust may furnish a fresh application in Form No. 10AB within the extended time i.e. 30.09.2023.

It is also clarified that where trusts have missed the deadline of 25.11.2022, for  making an application for registration/ approval in Form No. 10A, and have subsequently furnished Form No. 10A seeking provisional  registration/approval, the relevant functionality on the e-filing portal may be used for  surrendering the Form No. 10A seeking provisional registration/approval  and such trusts can make a new application in Form No. 10A for registration/ approval within the extended period up to 30.09.2023.

Extension of due date for furnishing of Form No. 10BD.

CBDT has also extended the due date for furnishing of statement of donation in Form No.10BD and the certificate of donation in Form No. 10BE in respect of the donations received during the financial year 2022-23 to 30.06.2023.

Clarification regarding applicability of provisional registration:

Eighth proviso to clause (23C) of section 10 of the Act, inter-alia, provides that in the case of a trust referred to under sub-clauses (iv), (v), (v i) or (via) of clause (23C) of section 10 of the Act seeking provisional approval, such approval shall be from the assessment year immediately following the financial year in which the application is made. However, the first proviso to clause (23C) of section 10 provides that the application for provisional approval is required to be made at least one month prior to the commencement of the previous year relevant to the assessment year from which approval is sought.

Similarly, clause (ac) of sub-section (1) of section 12A of the Act provides that the trusts seeking provisional registration are required to make an application at least one month prior to the commencement of the previous year relevant to the assessment year from which registration is sought. However, sub-section (2) of section 12A, inter-alia, provides that the provisional registration shall be applicable from the assessment year immediately following the financial year in which the application for such registration is made. On the same lines, the first proviso to sub-section (5) of section 80G of the Act provides that application for provisional approval by a fund or institution is required to be made at least one month prior to the commencement of the previous year relevant to the assessment year from which approval is sought. However, the fourth proviso to sub-section (5) of section 80G, inter-alia, provides that the provisional approval granted under the second proviso shall be applicable from the assessment year immediately following the financial year in which the application for such registration is made.

With a  view to bring consistency, it is hereby clarified that in case of trusts, funds  or institutions seeking provisional approval or provisional registration, the said provisional approval or provisional registration shall be effective from the assessment year relevant to the previous year in which  the  application is made and shall be valid for a period of three assessment years subject to the provisions of clause (iii) of the first proviso to clause (23C) of section 10 or in sub-clause (iii) clause (ac) of sub-section (1) of section 12A or clause (iii) of the first proviso to sub-section (5) of section 80G of the Act, as the case may be.

Clarification regarding denial of exemption in case where the statement of accumulation is not filed by the due date.

The Finance Act, 2023 has amended sub-section (2) of section 11 of the Act to provide that statement of accumulation as referred to in clause (a) of said sub-section [Form No. 10] is required to be furnished at least two months prior to the due date of furnishing return of income under sub- section (1) of section 139. Similarly, the provisions of Explanation 3 to the third proviso to clause (23C) of section 10 of the Act have also been amended. Further, the due date for furnishing the option for deemed application of in come in Form No. 9A under clause (2) of the Explanation 1 to sub-section (1) of section II of the Act has also been amended to be  at least two months  prior to the due date of furnishing  return of income, under sub-section (1) of section 139.

Representations have been received that the trusts may not be able to furnish Form No. 10 and Form No. 9A before the finalisation of their computation of income. Since the computation of income is finalised at the time of furnishing of return of income, therefore, the trusts should be allowed to furnish Form No. 10 and Form No. 9A by the due date of furnishing their income tax return.

It is clarified that the statement of accumulation in Form No. 10 and Form No. 9A is required to be furnished at least two months prior to the due date of furnishing return of income so that it may be taken into account while auditing the books of account. However, the accumulation/deemed application shall not be denied to a trust as long as the statement of accumulation/deemed application is furnished on or  before the due date of furnishing the  return as provided  in sub-section (1) of section 139 of the Act.

Clarification regarding audit report to be furnished in Form No. 10B.

One of the conditions  required  to be fulfilled by the trusts to be eligible to claim exemption, under the relevant provisions of the Act, is that where the total income of any trust, as computed under the Act, without  giving effect to the provisions of section 11 and section 12 of the Act or the provisions of the sub-clauses (iv), (v), (vi)  and (via) of clause (23C) of section 10 of the Act, as the case may be, exceeds the  maximum amount which is not chargeable to income-tax in any previous year, it is required to get its accounts audited.

In order to rationalise the provisions related to audit report of trusts  and in view of the significant amendments made to the taxation of trusts  over the  past few years, revised audit report in Form No. 10B and Form No. 10BB have been notified vide Notification No. 7 of 2023 dated 21.02.2023 so as to provide that the report of audit of the accounts of a trust, shall be furnished in –

(a) Form No. 10B where,

(i) the total income of trust, exceeds Rs five crores during the previous year; or

(ii)  such trust has received any foreign contribution during the previous year; or

(iii) such trust has applied any part of its income outside India during the previous year;

(b) Form No. 10BB in other cases.

Form No. 10B and Form No. 10BB requires the auditor to bifurcate certain payments or application in electronic modes and non-electronic modes.  The Notes to the said Forms provide that electronic modes shall be the following modes referred in rule 6ABBA of the Income-tax Rules, 1962:

(a) Credit Card;

(b) Debit Card;

(c) Net Banking;

(d) IMPS (Immediate Payment Service);

(e) UPI (Unified Payment Interface);

(f) RTGS (Real Time Gross Settlement);

(g) NEFT (National Electronic Funds Transfer); and

(h) BHIM (Bharat Interface for Money) Aadhar Pay

It has been represented that the above description of electronic modes does not include account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account.

It is hereby clarified that for the purposes of Form No. 10B and Form No. 10BB electronic modes are in addition to the account payee cheque drawn on a  bank or an account payee bank draft or use of electronic clearing system through a  bank account.