Form No. 10A: Trust Re-registration Process Explained

The Finance Act, 2020 and 2021 introduced changes to the law pertaining to the registration and approval of trusts under the Income-tax Act, 1961 (ITA). Section 12AB has been inserted to make the registration process of trusts effective. 

As per this, trusts are required to move from the earlier Section 12AA to the new provision of Section 12AB and obtain a fresh registration, which came into effect from April 1, 2021. 

Trusts are basically of two types: public trust and private trust. Public trust is further categorised into public charitable trust and public religious trust. 

Parties involved in a Trust document

• Author/Settlor/Trustor/Donor: the individual seeking to transfer their assets and entrusting another person to establish the trust.
• Trustee: The person who agrees to assume the responsibility of establishing the trust.
• Beneficiary: The individual who is set to receive benefits from the trust in the near future.

Trusts can avail of income tax exemptions and benefits under Section 12A, Section 12AA, and Section 80G of the ITA. Section 12A applies to both public charitable as well as public religious trusts (excluding trust/fund whose purpose is to benefit a particular community, caste or section).

The old Form No. 10 and Form No. 10G for Section 80G registration have been abolished. A new Form No. 10A with 21 points has been introduced, which is to be used primarily for two purposes.

In the case of approved trusts, Form No. 10A is to be used for making an application for re-registration.

Further, newly created trusts can use Form No. 10A for making an application for provisional registration.

A trust already registered, as per the earlier IT law, before April 1, 2021, the time limit is June 30, 2021. This is  three months from which the provision came into effect. 

In case of a trust that wishes to apply for a fresh registration or approval under the new IT law, the time limit is one month prior to the commencement of the previous year relevant to the assessment year from which the new approval is sought. 

A newly created trust will be provided with a provisional registration, which will be valid for three years. Also, such trust needs to apply for permanent registration six months prior to completion of this three-year validity period or within six months of commencement of activities, whichever is earlier. For example, a newly-formed trust received certification on 1st April 2021 and commenced activities on 1st June 2021. The provisional registration will remain valid until 1st April 2024, but the trust would be required to apply for final registration before 30th November 2021(within six months of commencement of activities) through Form 10AB.

On the other hand, for the approved trusts, the permanent registration, once granted, will be valid for five years. Such trusts need to apply for renewal of registration six months before completing this five-year validity period.

Who is eligible to create a Trust?

Trust can be created by:

Any individual or entity capable of entering into contracts, such as individuals, Associations of Persons (AOPs), Hindu Undivided Families (HUFs), businesses, and so on.

If a trust is being established for or on behalf of a minor, it is essential to obtain the consent of a Principal Civil Court with original jurisdiction.

Additionally, the ability to create a trust depends on the prevailing laws at the time and the extent to which the trust's creator intends to distribute their assets.

Why Is Trust Registration Necessary?

1. Registering the trust grants it legal recognition, establishing it as a distinct legal entity. This recognition is crucial for facilitating the trust's various activities.
2. By registering the trust, it guarantees adherence to all the rules and regulations set forth by the Government, ensuring the trust operates in compliance with the law.
3. Trusts are liable to pay taxes, and registering the trust plays a crucial role in determining its tax obligations. By undergoing registration, the trust's tax liability can be properly assessed and determined.
4. Through the process of trust registration, the activities and financial transactions of the trust are made public. This fosters transparency, accountability, and ensures that the trusts are utilized for their intended purpose.
5. Registering the trust provides tangible evidence of ownership over the trust property, which is essential for trustees to effectively administer and manage the property. This documentation helps establish a clear and recognized ownership status, enabling trustees to carry out their duties efficiently.
6. Due to the trust's distinct legal identity, trustees find it easier to conduct transactions and access resources. The separation of the trust's legal entity simplifies administrative processes, enhances credibility, and facilitates the trustees' ability to engage in various transactions and secure necessary resources for the trust's operations.

Changes Introduced in Filing of Form No. 10A Online

Basically, there are six sections in Form No. 10A and relevant details are required to be filled in pertaining to incorporation and constitution, other registration, key persons, assets and liabilities, income and religious activities.

You need to click each of these sections one by one and key in the details. The new e-filing portal requires you to fill the information section-wise after which the data has to be saved. This is unlike the earlier version, where you had to fill in all the information in a single go. Also, most details are in auto-populated form.  

While filing the incorporation and constitution section, you are required to provide the date of incorporation/creation or registration, which is mandatory now.

The attachments of annual accounts for immediately preceding three financial years were mandatory earlier. It is not the case in the new portal.

Documents Required as Attachments with Form No. 10A

The documents, which are required to be uploaded along with Form No. 10A include self-certified copies of the:
 

• Trust deed (two copies) or memorandum of association (MoA)
• Registration certificate
• Permanent Account Number (PAN) and Aadhaar cards of the managing trustees
   
• Digital signatures of one of the trustees
• Existing 12A, 12AA and 80G certificates
• Foreign Contribution (Regulation) Act (FCRA) or any other certificate
• Annual accounts since the year of incorporation or for the immediately preceding three financial years (balance sheet, income and expenditure, receipts and payments accounts, and all relevant schedules)

Note: While attaching the required documents, the size of each document should not exceed 5MB and all the attachments together cannot exceed 50MB.

Process for Online Filing of Form No. 10A

• Log in to: www.incometax.gov.in
• Enter the user-id (PAN of the organisation) and password
• Select the ‘e-File’ tab and click on the ‘Income Tax Forms’ option and from the drop-down menu, select ‘File Income Tax Forms’
• Click on the tab: ‘Persons not dependent on any Source of Income (Source of Income not relevant)’
• ‘Tax Exemptions and Relief Form 10A’ is now visible, click on ‘File Now’
• The following details will appear auto-populated: PAN details of the organisation, ‘Online’ as the ‘Submission Mode’ and ‘Original’ as the ‘Filing Type’
• Select from the drop-down menu the Assessment Year (AY) 2022-23
• Click on the ‘Continue’ tab
• Now, click on ‘Let’s Get Started’ to fill out the form
• Submit the form using digital signatures or an electronic verification code (EVC)

Frequently Asked Questions (FAQ)

• While applying for a fresh registration, can you file Section 12A and Section 80G in a single application?While applying for a fresh registration, can you file Section 12A and Section 80G in a single application?

No, you will be required to file it twice after selecting the relevant ‘Section Code’ under the incorporation and constitution details on the portal.

• Why are details of religious activities required for filing Form No. 10A?

According to the provisions laid down in the IT Act, if an organisation incurs any expenditure which is religious in nature and it exceeds 5% of the total income for that particular year, such an organisation shall be ineligible for registration under Section 80G.

• If the return has been filed for the last assessment year, do you still need to upload the annual accounts of the last three financial years?

No, if the return has been filed before the due date, it is not required. However, it is still advisable to upload the attachments related to the details of accounts.

• What is the procedure after receipt of Form No. 10A?

The Principal Commissioner of Income Tax (PCIT) or Commissioner of Income Tax (CIT) on receipt of an application in Form No. 10A shall pass an order in writing granting an approval in Form No. 10AC. A 16-digit alphanumeric unique registration number (URN) will be issued to an applicant.

• What happens in cases where Form No. 10A is not duly filled or incomplete documents are attached by an applicant?

The PCIT or CIT will suitably provide an opportunity of being heard or demand further documents from an applicant if needed. If the said officer finds anything inconsistent, then may cancel the approval granted in Form No. 10A and URN, and such approval in Form No. 10AC shall be deemed to have never been granted or issued.