There are drastic changes proposed by the Finance Bill, 2020 is with regard to the registration and renewal of Charitable Trusts. with effect from 01.06.2020.

1. Re-validation of existing registrations:

• Till now, the procedure for registration of Charitable Trusts for taxexemption is provided u/s Section 12AA (U/s 12A for trusts registered prior to 1996). Now, All the existing Charitable Trusts and other Institutions registered u/s sections 10(23C), 12AA or 12A will have to apply afresh for registration under the new provisions of sections 10(23C) or 12AB on or before 31/08/2020.

• As of now, registration once granted u/s 12AA continues to be valid unlessand otherwise it is cancelled by the authority.Further, the Charitable Trusts are eligible for approval u/s 80G which enables its donors to get tax benefit on donation done by them. Approval u/s 80G is also valid until cancelled by the authority. Similar provisions even applicable to University, Educational Institution, Hospital or other Medical Institution claiming exemption u/s 10(23C). Now it amended that Fresh registration will be granted for a period of 5 years. Only thereafter all the Trusts/Institutions which are claiming exemptionu/s 10(23C) or 11 shall be required to renew the registration & approval every 5 years. Where the trust has changed or undertaken modifications of the objects clause then an application is required to be done within a period of 30 days from the date of the said modification.

• Provisional Registration of the new trusts:

New trust (first timer) or trust which have not started any activities,will not be directly given full & final registration but will be granted only provisional approval or registration. Later on, such trust may be granted regular registration after verification of its activities.

Such provisional registration would be valid for 3 years.Such trust which are provisionally registered are required to apply for regular 5 years registration within 6 months of commencement of its activities or at least 6 months prior to expiry of 3 years whichever is earlier.

• Real-time Registration u/s 12AB and 10(23C) Not Permissible:

Currently, there are several hospitals, schools and colleges are registered simultaneously u/s 10(23C) as well u/s 12AA. If exemption is denied u/s 10(23C) then such trust could have taken the benefit of alternative backup of section 12AA. Now, all such charitable trusts and intuitions which are currently registered u/s 10(23C) as well u/s 12AA will have to make a choice of anyone section. Simultaneous registration under both the section 10(23C) & 12AA is not allowed.

• New reporting obligation on receipt of donation.

Every such trust which is registered u/s 80G shall be required to file a statement of donations received in the prescribed manner. Deduction for donations u/s 80G to the donors shall be available only if the aforesaid statement / return is furnished by the charitable institution. Non submission of the return & statement will attracts late fee and fine and also restrict the deduction to the donor.

• National Register & UIN:

The Government of India also proposes to create a National Register of all charitable and religious institutions and the Income Tax Department will issue a Unique Identification Number to all charitable and religious institutions. Amendments brought in by Finance Bill, 2020 will bring additional burden of compliances for Charitable/religious trusts institution etc. but it will definitely lead to greater and transparent monitoring of activities of charitable trusts.