Submitted by Charitable or religious Trust
Details provided in the form
Form 10AB is essentially a mandatory form for charitable trusts and organisations seeking tax benefits under Section 10(23C), 12A, or 80G. It requires detailed information about the trust or organisation, specifically, its activities and financials.
Form No. 10AB of the Income-tax Act, 1961: Importance and Purpose
With the advent of new tax regulations in India, Form 10AB now plays a crucial role for charitable trusts and non-profit organizations (NPOs) seeking tax benefits. In this thorough overview of Form 10AB, delving into its applicability, purpose, filing process, and much more.
What is Form 10AB of the ITA, 1961
Form 10AB is a mandatory document for charitable trusts and organizations that intend to claim tax benefits under Section 10(23C), 12A, or 80G of the Income Tax Act (ITA), 1961. The form demands comprehensive information about the entity, specifically its activities and financials.
Applicability of Form No. 10AB
Form 10AB applies to multiple categories of organizations, including:
1.Trusts or institutions currently holding permanent registration or approval, who need to reapply after five years.
2.Trusts or institutions with provisional registration for three years. These organizations can gain permanent registration only after submitting Form 10AB.
3. Organizations seeking initial registration or approval, including newly established trusts and institutions that wish to claim tax benefits.
4. Existing registered trusts and institutions seek renewal of their registration or approval every five years.
5. Trusts or institutions planning to convert their provisional registration to regular registration.
6. Trusts or institutions whose registration has become inoperative due to the first proviso to Section 11(7).
7. Trusts or institutions that have adopted or undertaken modifications of the objects that do not conform to the conditions of registration.
The Shift to the New System
The Finance Act, 2020 introduced significant changes to the registration system of charitable trusts, institutions, and NPOs/NGOs. Previously, once registered, these entities held a lifetime validity unless the Income Tax Department cancelled it. The new Act, however, introduced the new concept of provisional and permanent registrations, requiring such entities to reapply for tax benefits under Section 10(23C), 12A, 12AA, 35, or 80G and obtain a new registration under Section 12AB.
Provisional Registration and Permanent Registration
The concept of provisional and permanent registrations was introduced to tackle practical difficulties in granting registration or approval before the commencement of actual charitable activities by a trust or institution.
Provisional RegistrationExisting trusts or institutions seeking registration under Section 12AB obtain a provisional registration. This process requires the filing of Form 10A for a first-time application. Provisional registration is granted for a period of three years.
Permanent Registration
After obtaining the provisional registration, trusts or institutions must apply for permanent registration by submitting Form 10AB. This application should be made at least six months before the provisional registration expires or six months after the commencement of the trust’s charitable activities, whichever comes earlier. The registration is then granted for a period of five years. At the end of this period, re-registration is necessary, at least six months before the five-year period ends.
Format of Form 10AB
Form 10AB is used for both the renewal of registration and the conversion of provisional registration to regular registration. The form requires detailed information about the organization, specifically its activities and financials.
Documents Required for Filing Form 10AB
The list of documents to be submitted along with Form 10AB includes self-certified copies of:
1. The instrument creating or establishing the applicant.
2. The registration certificate with the Registrar of Public Trusts, Registrar of Companies, or Registrar of Firms and Societies.
3. Annual accounts of the applicant relating to the prior year or years (not more than three years immediately preceding the year of application).
4. Annual accounts of business undertaking relating to the prior year or years (not more than three years immediately preceding the year of application) and audit report as per the provisions of section 44AB where a business undertaking is held by the applicant.
Benefits of Form 10AB
Completing Form 10AB is a legal requirement for trusts and institutions meeting the parameters discussed above, but it’s also to an organization’s benefit to file this form. They can rest assured they comply with tax laws and regulations and access any potential tax leniencies and exemptions.
Since it’s simple for a tax form, and some sections are pre-filled (such as required family member’s names), organizations have no excuse to forego or delay the completion of Form 10AB.
Failing to file the form, making mistakes, or filing too late can risk an organization’s registration status. They will also delay receiving any tax benefits or exemptions.
Timelines for Filing Form 10AB
For new trusts applying for fresh registration for a specific financial year, the application should be made with Form 10AB one month before the commencement of the financial year. However, trusts and organizations converting their provisional registration to final registration need to apply either six months before the provisional registration expires or within six months of the commencement of charitable activities.
Conclusion
Form 10AB is an income tax form in India that requires charitable organizations, institutions, and trusts to stay tax-compliant. The form is detailed but forthright and must be filed by the tax deadline in July to ensure registration is renewed promptly.
Don’t forget to fill out Form 10AB if required. Take your time, check your math, and submit the form with your digital signature.
Click here to download the pdf format of Form 10AB
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