Revalidation of 80G and 12A - Process and Procedure

Charitable institutions are eligible for certain tax exemptions and benefits in India. These exemptions and benefits are dealt with under Sections 12A/12AA and 80G of the Income Tax Act, of 1961. To continue obtaining the benefits, the institutions availing themselves of these exemptions and benefits had to revalidate their registrations under these two sections before August 2020. This revalidation process focuses on whether the charitable activities of the institution, trust, or NGO are genuine or not. 

Section 12A of the Income Tax Act, 1961

Registration of trust or charitable institutions under section 12A/12AA certifies that the Income Tax authorities recognise the registered institution or trust as having been incorporated or established for a charitable purpose.

The effect of such recognition is that the respective institutions are exempted from paying income tax, subject to the satisfaction of certain other compliance requirements as per law.

Section 12A deals with institutions and trusts registered before 1996, and Section 12AA deals with institutions and trusts registered after 1996. The NGOs have to obtain a 12A certification to avail tax benefits, regardless of whether they are constituted as a society, trust or not-for-profit company.

Section 80G of the Income Tax Act, 1961

Registration of trusts or charitable institutions under Section 80G does not provide any direct benefits to them. The trusts or charitable institutions register themselves under Section 80G to enable the donors who contribute to them to avail themselves of certain tax benefits on their contributions.

The registration under section 80G of charitable institutions is to incentivise their donors to make contributions. However, only the NGOs that have registered under both Section 12A and 80G are eligible for availing of government funding.

Procedure of Revalidation Under Section 12A and 80G 

In order to claim exemption, a charitable or religious trust or institution, including an NGO, should make an application to the Principal Commissioner of Income Tax or Commissioner of Income Tax online in Form 10A. The procedure of applying for revalidation/registration are mentioned below: 

Step 1: Log in to the E-filing portal of the IT department. 

Step 2: Go to the ‘Income Tax Forms’ under the e-File tab.

Step 3: Choose the Form Name as ‘Form 10A’ and select the relevant Assessment Year from the drop-down list.

Step 4: Choose the ‘Prepare and Submit Online’ option in the submission mode.

Step 5: Fill in all the details required in the form and attach the applicable attachments.

Step 6: Submit the form using EVC (Electronic Verification Code) or Digital Signatures as required during return filing.

The NGO’s applying for registration/revalidation as per the amended provisions of Section 80G are mandatorily required to provide the details of their Registration number with the DARPAN portal of Niti Aayog.

The registration under Section 12A and 80G are also mandatory when the organisations intend to receive or receive any grant or assistance from the Central Government or State Government.

Documents Required for Revalidation 

The following are the documents that need to be submitted while applying for revalidation:

• Self-certified copy of the incorporation document of Societies/Trust
• Self-certified copy of the registration with the Registrar of Companies or Registrar of Societies or Registrar of Firms or Registrar of Public Trusts, as the case may be
• Self-certified copy of registration under the FCRA [Foreign Contribution (Regulation) Act], 2010, if the applicant is registered under the respective Act.
• Self-certified copy of the existing order of registration under section 12A/12AA/12AB, as the case may be
• Copies of the annual accounts for a period not exceeding three years immediately prior to the year in which the application is made, in the case of existing entities
• Where the income of the organisation includes the profits and gains of business or where a business undertaking is held by the organisation under the provisions of Section 11(4A), copies of the annual accounts and audit report under Section 44AB for three years immediately prior to the year in which the application is made
• Self-certified copy of the documents showing/evidencing modification or adoption of the objects
• Notes on the activities of the trust or institution
• The details of the DARPAN registration, if the organisation is registered on the DARPAN portal

Issuance of Certificate of Revalidated Registration

After 1 April 2021, upon filing the application for revalidation, an order granting the revalidated registration is passed within three months. The revalidated registration under section 12A and/or 80G is valid for a period of five years, after which it needs to be revalidated again. The re-application after five years has to be made at least six months before the expiry of the validity period of the registration.

After receiving the revalidation application under 10A, the Principal Commissioner of Income Tax (PCIT) or Commissioner of Income Tax (CIT) will pass an order of granting approval in writing in Form No.10AC and issue a 16 digit Unique Registration Number (URN) to the applicants.

The PCIT/ CIT may reject the application after giving an opportunity of being heard or demand further documents from the applicant if needed. The rejection order is also passed in Form No.10AC. 

The applicants must submit the application for renewal after the initial five years of registration in Form No.10AB. Upon receiving the application under Form No.10AB, the PCIT/CIT will make the order of registration or cancellation of registration or rejection in Form No.10AD. 

The PCIT/CIT is entitled to demand from the applicant further documents to satisfy the genuineness of the activities of the institution or trust and the compliance of the requirements under any other law for the time being in force by the institution or trust that are material to achieve its objects.

It is to be noted that significant changes have been made in the revalidation procedure as follows:

• The registration validity period under section 12AA/12AB has been extended from 5 to 10 years for trusts and charitable institutions whose total income did not exceed (before exemption) Rs. 5 Crore in each of the preceding two years.
• This amendment will apply to cases where the application is made after March 31, 2025. It does not apply to the provisional registration of a new trust, where registration is granted for 3 years.
• It is to be noted that small trusts whose approval was valid until March 31 2026 will still have an application for renewal by September 30, 2025, but the renewal granted to them will be applicable for 10 years instead of 5 years, and trusts and institutions must still apply for registration renewal under section 80G every 5 years.
• An amendment has been made in the renewal or registration of trusts and institutions subject to cancellation by the commissioner. It would now only be on false and incorrect information. Earlier, if the application was incomplete, the whole application would be rejected.

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3. Form 10A -trusts re-registration