Unclarity in the Proposed Amendment to Section 12AB in Budget 2025

CA Aman Rajput | Last updated: 11 February 2025

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Budget 2025 proposed extending trust and institution registrations under Section 12AB from five to ten years. However, there is significant unclarity regarding how this applies to different types of trusts. Specifically, it's unclear if existing registrations will automatically be extended, and if trusts registered before a certain date will benefit from the ten-year validity. The proposed amendment also raises concerns about the practicality of provisional registrations for new trusts.

Budget, 2025 proposed extending the validity of trust and institution registrations as per section 12AB from 5 years to 10 years. However, doubts are arising regarding its applicability across different categories of trusts and institutions.

Budget 2025: Section 12AB Amendment Clarity Needed

Like what about existing trusts (12A(1)(ac)(i))?

The amendment applies only to new applications, but as no new applications can be filed after 1st April 2025 under this sub-clause, it is unclear whether existing registrations will automatically extend to ten years.

What about the renewal of registrations (12A(1)(ac)(ii))?

Trusts renewing after 1st April 2025 will get ten-year registration, but clarity is needed on whether those registered before this date will benefit.

What about the case of provisional registrations (12A(1)(ac)(iii))?

The requirement that total income (before applying for exemptions) should not exceed ₹5 crore in the preceding two years is impractical for newly established trusts that lack financial history.

The author can be contacted at aman.rajput@mail.ca.in

FAQ :

Budget 2025 proposed extending the validity of trust and institution registrations under Section 12AB from five years to ten years.

There is unclarity regarding the applicability of the ten-year registration validity across different categories of trusts and institutions.

The amendment appears to apply only to new applications. As no new applications can be filed after 1st April 2025 under this sub-clause, it is unclear if existing registrations will automatically extend to ten years.

Trusts renewing their registration after 1st April 2025 will receive a ten-year registration. However, clarity is needed on whether those registered before this date will also benefit from the extended validity.

For provisional registrations (12A(1)(ac)(iii)), the requirement that total income (before exemptions) should not exceed ₹5 crore in the preceding two years is impractical for newly established trusts that lack financial history.

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About the Author

CA Aman Rajput

Chartered Accountant

CA Aman Rajput, Associate Chartered Accountant, DISA, FAFDContact me at 8209604735Email ID aman.rajput @ mail.ca.in Introduction CA Aman Rajput is an entrepreneurial Chartered Accountant and Partner at ATK and Associates, headquartered in Ghaziabad. With a strong academic foundation, holding a Masters in Commerce, ... Read more

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