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12AB Registration

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  • Overview
  • Benefits
  • Eligibility
  • Documents
  • Process
  • Validity
  • Types
  • Fees
  • FAQs

What is 12AB Registration?

The Finance Acts, 2020 and 2021 have made many changes in the laws related to Trusts and NGOs which were exempted under Section 11 and 12 of the Income Tax Act, 1961. These amendments in the Finance Act are related with the following provisions:

  • Registration process of all the existing registered trusts under section 12AB.
  • Renewal of registration.
  • Approval for deduction under Section 80G of the Income Tax Act, 1961
  • Preparation of statement of donations received, which are to be intimated to the Income Tax Department. 

 

According to this amendment, to continue taking benefits of exemption under section 10 or 11 of the Income Tax Act, 1961, all charitable and religious institutions registered under Sections 12A, Section 12AA, Section 10(23C) and Section 80G must change to section 12AB for fresh registration. These new provisions came into effect from 1st April 2021, due to which every trust or institution which was already in existence  and registered under section 12A, 12AA, 80G, or section 35 must apply for fresh registration under section 12AB.


In case of fresh registrations, trusts and other similar charitable organizations need to directly apply for registration under section 12AB of the Income Tax Act, 1961.

 

What is 12AB Registration Benefits?

Following are the benefits of 12AB Registration are below:

  • Forming E-Database: Section 12AB shall provide and act as electronic database. 
  • Recordkeeping: Registration under Section 12AB will help in maintaining records of old as well as fresh registrations at one place. There may be many old trusts and organizations which may have lost their records and even the Income Tax Department  does not have records of all firms registered under Sections 12A, 12AA, 80 G. Now with Section 12AB coming in effect, all records shall be stored electronically. 
  • Provision of Facilities for new firms: Some newly registered trusts may face difficulties due to nil or less activities. Implementation of Section 12AB has removed these difficulties by providing some relaxations and facilities.

 

What is 12AB Registration Eligibility?

According to this amendment, to keep enjoying benefits and relaxations of exemption provided to them under section 10 or 11 of the Income Tax Act, 1961, all charitable and religious institutions and trusts registered under Sections 12AA, Section 12A and Section 80G must change to section 12AB for fresh registration.

Also, various institutional trusts registered under section 10(23C) are also required to renew their registration under section 12AB. Since Section 12AB came into effect, Section 12AA will cease to exist.

 

What Documents Required for 12AB Registration?

A number of documents are required for registration under 12AB. A comprehensive list of documents is given below:

  • PAN Card of Trust.
  • Trust deed
  • Certificate of Incorporation and MOA.
  • NOC from the Landlord, if the property is in rented premises. 
  • Copy of utility Bills like Electricity Bill, Water Bill etc.
  • Details of the Governing body or members of the Institution/Trust.
  • Proof of welfare and charitable activities which are done by the trusts. Also, a report of these welfare activities of the last 2 years or since incorporation is needed.
  •  ITR of the last 3 years of trusts. 
  •  Account Books, Balance Sheet, Donors Details like along with their Address and Identity proof.

 

What is 12AB Registration Procedure?

The following steps are taken for registration under section 12 AB:

  • Visit the website of Income Tax Department
  • Navigate to Forms Section and search for Form 12AB available on the website under Income Tax Forms Section in the e-file menu.
  • Complete the application for Section 12AB registration which should be made to The Principal Commissioner or Commissioner by filing Form 10A online.
  • After reviewing the application, checking the documents and compliance requirements and being satisfied with the activities carried out by the trust or organization, the Commissioner or Principal Commissioner will pass an order and grant approval.
  • In a scenario where Commissioner or Principal Commissioner is not satisfied either with the application or with the compliance or activities of the charitable trusts or institution he/she may deny or cancel the registration. 
  • A chance to appeal before the authority shall be provided before cancellation of the registration.

 

What is 12AB Registration Validity?

The registration under section 12AB remains valid for 5 years. Cases where Provisional registration was granted, here the registration is valid for 3 years. All the registrations granted under section 12AB are subject to renewal as determined under the new guidelines.

 

What Types of 12AB Registration?

There are following ways for registration under 12 AB:

  • Re-registration for existing trusts registered under 12A/12AA.
  • Provisional Registration
  • Provisional Registration to Normal Registration.
  • Renewal of Registration under Section 12AB.

 

What is 12AB Registration Fees?

FAQs

ARegistration under Section 12AB describes the process of obtaining approval under sections 11 and 12 of the Income Tax Act, which grants tax exemption to charitable and religious trusts and institutions.

Religious and Charitable institutions and trusts involved in activities such as education, promotion of art and culture, healthcare, poverty relief, social welfare etc. are eligible for getting concessions under 12AB registration.

You can apply for 12AB registration by submitting Form 10A online on the income tax portal.

Documents requirement for Section 12AB registration includes certificate of incorporation or MOA, trust deed, income tax returns of last three years or since incorporation, PAN card, income statements, account statements and details of activities of trusts.

Yes, there is a government fee for applying for 12AB registration. The fee amount may differ and so it is advised to check the latest fee schedule.

The time taken for 12AB registration depends on a number of factors including the accuracy of the application that was filed. Normally it takes a few months for the registration process to complete.

Yes, if the concerned authority like the Commissioner or Principal Commissioner of Income Tax, feels that either the application is incomplete, or if they are not satisfied with the supporting documents or activities of the company, they may deny registration.

Yes, trusts can raise an appeal against the denial of registration. In this case they need to present their appeal along with relevant and supporting documents and proof of charitable activities to the Commissioner or Principal Commissioner of Income Tax.

No, the registration under Section 12AB is not mandatory for all charitable trusts. However, trusts are advised to get 12AB registration because not only it provides tax benefits but also enhances the credibility of the trust.

Trusts primarily engaged in commercial activities may face legal issues while obtaining 12AB registration. Their focus should be on activities that align with charitable and social objectives.

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