CA Santhosh Gupta Kethepalli
Quick Summary
Finance Act, 2020 has made changes with respect to provisions related to Trusts and NGOs claiming exemption u/s 11 or u/s 12 of the Income Tax Act, 1961. These amendments are related to:- a) registration procedure of all the existing registered trusts under section 12AB, b) renewal of registr
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FAQ :
The Finance Act 2020 has introduced changes to the registration procedure for existing and new trusts under section 12AB, implemented a renewal system for registrations (valid for 5 years), and altered the approval process for deductions under section 80G. It also aims to simplify donation claims by pre-filling donor information.
Under the Finance Act 2020, registrations granted to charitable trusts are no longer perpetual. They are now valid for a period of 5 years and require renewal.
The Finance Act 2020 introduces provisional registration for new charitable institutions that are yet to commence their activities. This provisional registration is typically granted for a period of three years.
The Act proposes to pre-fill the donee's information in the taxpayer's income tax return based on the details furnished by the donee. This aims to make the process of claiming deductions for donations more hassle-free for taxpayers.
The concept of renewal of registration was introduced to curb malpractices and prevent the misuse of tax exemptions given to trusts. It allows for periodic reviews of the trust's adherence to its stated objects, genuineness of activities, and compliance with other applicable laws.
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