NPO – Not for profit organization
As we all know from 01.04.2021, there has been drastic change made in registration norms of NPO, which requires all NPOs to get registered under Section 12A & 80G of Income Tax Act, 1961. Prior to 31.03.2021, once registered under Section 12A & 80G of Income Tax Act, the registration would be valid for lifetime until the same is specifically cancelled by Income Tax department. From 01.04.2021, this norm is changed and now the registration is granted for a limited period and is required to be renewed on regular basis.
Process for NPOs already registered under 12A & 80G before amendment:
As per new provisions, all existing NPOs which were registered under Section 01-Sub clause (i) of clause (ac) of sub -section (1) of section 12A & 11-Clause (i) of first proviso to sub-section (5) of section 80G prior to 31.03.2021, are required to apply for registration on or before 31.03.2022* in Form 10A.
These amendments were originally introduced by the Finance Act, 2020 effective from 1St June 2020, However, due to unprecedented economic crisis, the government passed “The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020” as on 29th September 2020 to defer the implementation of new procedure and make it effective from 1st April 2021
(*The original due date was 30.06.2021 and is being extended from time to time, the latest due date being 31.03.2022).
Process for NPOs applying for first time for registration 12A & 80G after the amendment:
A NPO can apply for registration under 12A and 80G. Such organizations will be granted “provisional registration”. The validity period of provisional registration is 3 years; however, NPO is required to apply for Final registration in Form 10AB under Section 12A & 80G of Income Tax Act, 1961 at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier.
Illustration: As on 1St April 2021 Trust provisionally Registered under Section 12AB. Validity of Provisional Registration Certificate 3 Years i.e till 1St April 2024
Scenario 1: NPO Activities commences as on 1St April 2021 in that scenario Time limit for making application for registration u/s 12AB in Form 10AB shall be within 6 months of commencement of activities. i.e., till 30th September 2021
Scenario 2: If Activity Commences as on 1St April 2024 in that scenario Time limit for making application for registration u/s 12AB in Form 10AB shall be at least six months prior to expiry of the period of the provisional approval. i.e., Till 30th September 2023 From above it is clear that, all existing NPOs or newly formed NPO must apply for Final Registration under Section 12A & 80G in Form 10AB within six months of commencement of its activities. When we apply for Final registration under Form 10AB, and it is approved by proper officer then it is valid for 5 years. Now, we will discuss about the documents required for Filing application in Form 10AB
As per rule 11AA, following documents are required to be attached while Filing application in Form 10 AB :-
copy of the instrument creating the trust or establishing the institution
scan copy ofTrust Deed/ Memorandum of association/ scan copy ofByelaws/ Rules & Regulations/ Articles of association
copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be;
scan copy of Registration certificate under societies Act / Bombay public Trust Act / Registrar of companies
copy of registration under Foreign Contribution (Regulation) Act, 2010 (42 of 2010), if the applicant is registered under such Act
scan copy of Registration certificate under Foreign Contribution (Regulation) Act, 2010 (42 of 2010)
copy of existing order granting registration under section 12A or section 12AA or section 12AB or clause (23C) of section 10 or section 80G
scan copy of existing order granting registration under section 12A or section 12AA or section 12AB or clause (23C) of section 10 or section 80G
copy of order of rejection of application for grant of registration under section 12A or section 12AA or section 12AB or clause (23C) of section 10 or section 80G, as the case may be
scan copy of rejection of application under section 12A or section 12AA or section 12AB or clause (23C) of section 10 or section 80G
Where the trust or fund or the institution held by the applicant as per the provisions of sub-section (4) of section 11 has been in existence during any year or years prior to the financial year in which the application for registration is made, Self-certified copies of the annual accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up and self-certified copy of the report of audit as per the provisions of section 44AB for such period in case where section code is other than 13 or 14 in row number 2
Self-certified scan copy of last three years’ financial statement (for FY 18-19, FY 19-20 & FY 20-21) it should include:ITR Acknowledgement, Form 10B and its Acknowledgement, Balance sheet with relevant schedules & Notes to Accounts, Income and Expenditure/ Profit and Loss Account, Receipt and Payment Account, Auditors Report
Note on Activities carried out by NPO, PAN and Aadhar of Members of NPO, etc
All the above Documents should be Self-Certify
Note - How to Self-Certify documents?
You may put “self-Certified” and the president or secretary may sign with his/her name. In case of document having multiple pages, you may sign the first and last page in above manner. For example, in case of a trust deed of several pages, you may self-certify the first and last page.
Digital signature might be required for filing of application in case the income tax portal’s EVC facility is non-functional or not available for any reason.
Additional Detail to be Provided in Form 10AB which are not required to be reported at time of Provisional Registration in Form 10 A :-
> Details of School/ Institutions/ religious places which are being managed/ controlled/ administered/ owned by NPO
> If NPO is doing any business activity, then business code of that activity needs to provide
>Details of all bank accounts in the name of NPO, needs to provide
> Details of all land or building or both held by the applicant
> Details of expenditure incurred on religious activities (If any) After receipt of information, the proper officer will verify the details and after satisfaction will issue Final registration certificate which have 5 Years validity
Consequences of Not Filing Form 10 AB:
Existing Trust registered u/s 12AB of the Income Tax Act who wishes to claim exemption u/s 11 and u/s 12 are mandatorily required to obtain registration under the Income Tax Act in by filing Form No. 10AB.