Dilip K Raina
Quick Summary
Historically those institutions created with the main object of serving the general public without the aim to earn profits or distribute any income to the promoters of such institutions are called charitable institutions. State has some fundamental duties to discharge in the area of social and econo
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FAQ :
Charitable institutions are created to serve the general public without the aim of earning profits or distributing income to their promoters. Their primary objective is the betterment of the general public by investing all income towards their stated charitable goals.
The monitoring of charitable institutions began in 2008 by amending Section 2(15) of the Income Tax Act. This aimed to differentiate between income generated in line with an institution's charitable objects (treated as charitable income) and income not aligned with its objects (treated as business income and taxed).
The 2020 budget proposed inserting Section 12AB into the Income Tax Act to enhance monitoring and control over charitable institutions. This includes a review and renewal process for registrations.
Under Section 12AB, there will be two types of registration: Provisional Registration, valid for three years, and Registration, valid for five years. Lifetime registrations will no longer be available.
If the Principal Commissioner or Commissioner is not satisfied with an application for registration or renewal, they can reject the application or cancel the existing registration. However, the institution must be given a reasonable opportunity of being heard before any such action is taken.
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