Trusts have to apply for income tax exemption by May 31

Last updated: 18 May 2007

A charitable or religious trust or institution, which wants to be condoned for delay in earlier years in registration under the Income Tax Act for exemption, can file its application by May 31. Registration under Section 12 A of the Act is a pre-condition for a charitable or religious trust or institution to be exempt from income under sections 11 and 12. Earlier, for registration, the trust or the institution had to apply in form no.10 A to the Commissioner of Income Tax within a year of establishment. If application is made after a year, the Commissioner may condone the delay, if convinced of the reasons.

In such cases, the exemption is available from the date of establishment. Otherwise, it is available from the financial year in which the application for registration is made.

The Finance Act 2007 has waived the requirement for filing the application within a year of establishment of a trust or institution. It has also abolished the Commissioner's power to condone delay, stipulating that for any application made by June 1, registration be granted from the financial year in which the application is made.

To be condoned for the delay in earlier years, any trust or institution, which does not file the application within a year of its creation, may apply before June 1. Applications filed by June 1 will entitle the trust or institution to exemption from the financial year in which the application is made and not for the earlier years, says a release.

Chief Commissioner of Income Tax, Chennai, C.R. Ravichandhran, says 7,000 trusts operated in the jurisdiction of Chennai city.