Clarification regarding provisions relating to charitable and religious trusts

Circular No.6 of2023

F. No.370 I 33/06/2023-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
(TPL Division)

Sub: Clarification regarding provisions relating to charitable and religious trusts – reg.
I. Income of any fund or institution or trust or any university or other educational institution or
any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause
(vi) or sub-clause (via) of clause (23C) of section 10 of the Income-tax Act, 1961 ( “the Act”) or any
trust or institution registered under section 12AA or section 12AB of the Act (hereinafter referred to as
“the trust”) is exempt subject to the fulfi lment of the cond itions provided under relevant sections of
the Act. Taxation and Other Laws (Re laxation and Amendment of Certain Provisions) Act, 2020
amended the provisions related to application by a trust for registration or approval by amending the
first and second proviso to clause (23C) of section 10, clause (ac) of sub-section (I) of section 12A of
the Act, in serting section 12AB of the Act and amending the first and second proviso to sub-section
(5) of section 80G of the Act. The amended provisions provide for the fo ll owing:

(a) All the existing trusts were required to apply for registration/approval on or before 30.06.2021.
However, on consideration of difficulties in the electronic filing of Form No. lOA, the Central
Board of Direct Taxes (the Board) in exercise of the powers conferred upon it under Section 119
of the Act extended the due date for filing Form No. lOA in such cases to 31.08.2021 vide
Circular No.12 of 2021 dated 25 .06.2021, to 3 1.03.2022 vide Circular No. 16 of 2021 dated
29.08.2021 and flllther till 25.11.22 vide Circu lar No. 22 of 2022 dated 01.11.2022. Such
registration/approval shall be val id for a period of 5 years. Thus, existing trusts are required to
app ly for fresh registration/approval and once the registration/approval is granted it is va lid for
five years.

(b) New trusts are required to app ly for provisional registration/approval at least one month prior to
the commencement of the previous year relevant to the assessment year from which the sa id
registration/approval is sought. Such provisional registration/approval is valid for a maximum
period of three years.

(c) Provisionally registered/approved trusts will again need to app ly for regular registration/approval
in Form No. 10AB at least six months prior to the expiry of the period of provisional
registration/approval or within six months of the commencement of activities, whichever is
earlier. This registration/ approva l is valid for a period of five years. On consideration of

difficulties in electronic filing of Form No. IOAB, the Board in exercise of its powers under
section 119 of Act extended the due date for electroni c fi ling of Form No. 10AB to 30.09.2022
vide Circular No 8 of2022 dated 31.03.2022.

(d) The trusts once approved/registered for fi ve years are required to apply at least six months prior
to the expiry of the period of five years.

(e) The deduction under section 80G of the Act in respect ofa donation made by a donor to a fund
or institution referred to in sub-clause (iv) of clause (a) of sub-section (2) of section 80G, shall
be all owed to the donor only if a statement of such donations is furnished by the donee in Form
lOBO. The certificate of such donation is required to be provided in Form No. lOBE. Further,
Form No. lOBO and Form No. lOBE are required to be furnished on or before the 3 1st May,
immediately following the financial year in which the donation is received.

2. Representations received from stakeholders requesting for clarity on provisions related to trusts
are dealt with as under: Clarification regarding application of section 115TD for failure to apply to registration/a pproval

3. Finance Act, 2023 has, inter-alia, amended section IISTO of the Act, so as to provide that the
accreted income of the trusts not applying for registration/ approval, within the spec ified time, shall be
made liable to tax in accordance with the provisions of section IISTO of the Act. This amendment has
come into effect from 01.04.2023 and therefore app lies to assessment yea r 2023-24 and subsequent
assessment years.

4. Representations have been rece ived stating that several trusts have not been ab le to apply for
registration/ approval within the required time due to gen uine hardship. This has also led to rejection
of applications simply on the grou nd that these were delayed. As mentioned in para I(a) above, the
last date for filing an application by the existing trusts seeking registration/ approval was extended to
25.11.2022 vide Circular No. 22 of 2022 dated 01.11.2022. Further, as stated in I (c) above, the due
date for furn ishing application for registration/approva l by the provisionally registered/a pproved trusts
was extended till 30.09.2022. These trusts shall be subj ect to tax under section IISTO of the Act in
accordance with the provisions of the said section, as amended by the Finance Act, 2023 if the
app lication is not made by 25. 11 .2022 or 30.09.2022, as the case may be.

5. In order to mitigate genuine hardship in such cases, the Board, in the exercise of the power
under section 11 9 of the Act, extends the due date of making an application in,-

(i) Form No.1 OA, in case of an application under clause (i) of the first proviso to clause (23C)
of section 10 or under sub-clause (i) of clause (ac) of sub-secti on (I) of section 12A or under
clause (i) of the first proviso to su b-section (5) of secti on 80G of the Act, till 30.09.2023 where
the due date for making such application has expired prior to such date;

(d) The trusts once approved/registered for fi ve years are required to apply at least six months prior
to the expiry of the period of five years.

2. Representations received from stakeholders requesting for clarity on provisions related to trusts
are dealt with as under:

Clarification regarding application of section 115TD for failure to apply to registration/a pproval

5. In order to mitigate genuine hardship in such cases, the Board, in the exercise of the power
under section 11 9 of the Act, extends the due date of making an application in,-

5. In order to mitigate genuine hardship in such cases, the Board, in the exercise of the power
under section 11 9 of the Act, extends the due date of making an application in,-
(i) Form No.1 OA, in case of an application under clause (i) of the first proviso to clause (23C)
of section 10 or under sub-clause (i) of clause (ac) of sub-secti on (I) of section 12A or under
clause (i) of the first proviso to su b-section (5) of secti on 80G of the Act, till 30.09.2023 where
the due date for making such application has expired prior to such date;

(ii) Form No. 10AB, in case of an application under c lause (iii) of the first proviso to clause
(23C) of section 10 or under sub-clause (i ii) of clause (ac) of sub-section (I) of section 12A of
the Act, till 30.09.2023 where the due date for making such appl icati on has expired prior to
such date.

6. In view of the above, trusts may now apply for registration/approva l under clause (i) or clause (iii)
of the first proviso to c lause (23C) of section 10 or sub-clause (i) or sub-c lause (iii) of clause (ac) of
sub-section ( I) of section 12A of the Act by 30.09.2023 and where such app lication is made by the
sa id date and registration/approval is granted, the provisions of c lause (iii) of sub-section (3) of section
115TD of the Act shall not apply on account of delay in making application in accordance with the
provisions of clause (i) or (i ii) of the first proviso to clause (23C) of section 10 or sub-clause (i) or (iii)
of clause (ac) of sub-section (I) of section 12A of the Act.

7. It may be also noted that the extension of due date as mentioned in paragraph 5(ii) shall also
apply in case of all pend ing applications under clause (i ii) of the first proviso to clause (23C) of
secti on 10 or sub-c lause (iii) of c lause (ac) of sub-section ( I) of section 12A of the Act, as the case
may be. Hence, in cases where the trust has already made an application in Form No. 10AB under the
said provisions but such application has been furnished after 30.09.2022 and where the Princ ipal
Commissioner or Commissioner has not passed an order before the issuance of this Circular, the
pending appl icati on in Form No. 10AB may be treated as a vali d application. Fu rther, in cases where
the trust had already made an application in Form No. 10AB, and where the Principal Commissioner
or Commissioner has passed an order rejecti ng such app li cation, on or before the issuance of this
Circular, solely on account of the fact that the application was furnished after the due date, the trust
may furnish a fresh app lication in Form No. 10AB within the extended time provided in paragrap h
5(ii) i.e. 30.09.2023.

8. It is a lso clarified that where trusts have missed the deadl ine of 25.11.2022, as mentioned in
para I(a) above, for making an applicati on for registrati on/ approva l in Form No. lOA, and have
subsequently furnished Form No. l OA seeking provisional registration/approval, the relevant
functionality on the e-filing porta l may be used for surrendering the Form No. lOA seeking
provisiona l registration/approva l and such trusts can make a new appl ication in Form No. lOA for
registration/ approval within the extended period up to 30.09.2023, as mentioned in paragraph 5(i).

Extension of due date for furnishing of Form No. IOBD.

9. In view of extension provided to funds or institutions seeking approval under sub-section (5) of
section 80G of the Act, as discussed in paragraph 5(i), in the exercise of the power under section 119
of the Act, the Board also extends the due date for furnishing of statement of donation in Form No.10BD and the cel1ificate of donation in Form No. lOBE in respect of the donations received during
the financial year 2022-23 to 30.06.2023.

Clarification regarding applicability of provisional registration
10. Eighth proviso to clause (23C) of section 10 of the Act, inter-alia, prov ides that in the case of a
trust referred to under sub-clauses (iv), (v), (vi) or (v ia) of clause (23C) of section 10 of the Act
seeking provisional approval, such approval shall be from the assessment year immediately following
the financial year in which the application is made. However, the first proviso to clause (23C) of
section 10 prov ides that the application for provisiona l approva l is required to be made at least one
month prior to the commencement of the previous year relevant to the assessment year from wh ich
approva l is sought.

I I. Similarly, clause (ac) of sub-section ( I) of section 12A of the Act provides that the trusts
seeking provisional registration are required to make an app lication at least one month prior to the
commencement of the previous year re levant to the assessment year from which registration is sought.
However, sub-section (2) of section 12A, inter-alia, provides that the provisional registration shall be
appli cable from the assessment year immediate ly following the fina ncial year in which the application
for such registration is made. On the same lines, the first proviso to sub-section (5) of section 80G of
the Act provides that appli cati on for provisiona l approval by a fund or institution is required to be
made at least one month prior to the commencement of the previous year re levant to the assessment
year from whi ch approval is sought. However, the fou rth proviso to sub-section (5) of section 80G,
inter-alia, prov ides that the provisiona l approva l granted under the second proviso sha ll be applicable
from the assessment year immediate ly following the financial year in which the application for such
registration is made.

12. With a view to bring consistency, it is hereby c lari fied that in case of trusts, funds or
institutions seeking provisional approval or provisional registration as referred to in para 10 and I I,
the sa id provisional approva l or provisional registration shall be effective from the assessment year
relevant to the previous year in whi ch the application is made and sha ll be valid for a period of three
assessment years subj ect to the provisions of c lause (iii) of the first proviso to clause (23C) of section
10 or in sub-c lause (iii) clause (ac) of sub-section (I) of section 12A or clause (i ii) of the first proviso
to sub-section (5) of section 80G of the Act, as the case may be.

Clarification regarding denia l of exemption in case where the statement of accnmnlation is not
filed by the due date.

13. Finance Act, 2023 has amended sub-section (2) of secti on I I of the Act to provide that
statement of accumulation as referred to in clause (a) of sa id sub-section [ Form No. 10] is required to
be furnished at least two months prior to the due date of furn ishing return of income under sub-

section ( I) of section 139. Similarly, the provisions of Explanation 3 to the third proviso to clause
(23C) of section 10 of the Act have a lso been amended. Fu rther, the due date for furnishing the option
for deemed application of income in Form No. 9A under clause (2) of the Explanation I to subsection (I) of section II of the Act has also been amended to be at least two months prior to the due
date of furnishing return of income, under sub-section (I) of section 139.

14. Representations have been received that the trusts may not be able to furnish Form No. 10 and
Form No. 9A before the finalisation of their computation of income. Since the computation of income
is finalised at the time of furnishing of return of income, therefore, the trusts should be allowed to
furn ish Form No. 10 and Form No. 9A by the due date of furnishing their income tax return.

I5. It is clarified that the statement of accumulation in Form No. 10 and Form No. 9A is required to
be furnished at least two months prior to the due date of furnishing return of income so that it may be
taken into account while auditing the books of account. However, the accumulation/deemed
application shall not be denied to a trust as long as the statement of accumu lation/deemed application
is furnished on or before the due date of furnishing the return as provided in sub-section (I) of section
139 of the Act.

Clarification regarding audit report to be furnished in Form No. lOB.

16. One of the conditions required to be fulfilled by the tru sts to be eligible to claim exemption,
under the re levant provisions of the Act, is that where the total income of any trust, as computed under
the Act, without giving effect to the provisions of section II and section 12 of the Act or the
provisions of the sub-clauses (iv), (v), (vi) and (via) of c lause (23C) of section 10 of the Act, as the
case may be, exceeds the max imum amount wh ich is not chargeab le to income-tax in any previous
year, it is required to get its accounts audited.

17. In order to rationalise the provisions related to audit report of trusts and in view of the
significant amendments made to the taxation of trusts over the past few years, revised audit report in
Form No. lOB and Form No. 10BB have been notified vide Notification No. 7 of 2023 dated
21.02.2023 so as to provide that the report of audit of the accounts of a trust, sha ll be furnished in –
(a) Form No. lOB where,

(i) the total income of trust, exceeds Rs five crores during the previous year; or
(ii) such trust has recei ved any foreign contri bution during the previous year; or
(iii) such trust has app li ed any part of its income outside India during the previous year;
(b) Form No. 10BB in other cases.

18 . With regard to the above it may be noted that Form No. lOB and Form No. 10BB requires the
auditor to bifurcate certain payments or application in electron ic modes and non-electronic modes. The

Notes to the said Forms provide that electronic modes shall be the foll owing modes referred in rule
6ABBA of the Income-tax Rules, 1962:
(a) Credit Card;
(b) Debit Card;
(c) Net Banking;
(d) IMPS (Immediate Payment Service);
(e) UPI (Unified Payment Interface);
(f) RTGS (Real Time Gross Settlement);
(g) NEFT (National Electronic Funds Transfer); and
(h) BHIM (Bharat Interface for Money) Aadhar Pay.
19. It has been represented that the above description of electronic modes does not include account
payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system
through a bank account.

20. It is hereby clarified that for the purposes of Form No. lOB and Form No. IOBB electronic
modes referred to in para 18 are in addition to the account payee cheque drawn on a bank or an
account payee bank draft or use of electronic clearing system through a bank account.

21. Hindi version to follow.

(Yipul Agarwal)
Director (TPL-I), CBDT

Copy to the:
I. PSI OSD to FM/ PS/OSD to MoS (F).
2. PS to the Finance Secretary.
3. Chairman and Members, CBDT.
Q~
(Yipul Agarwal)
Director (TPL-I), CBDT
4. Joint Secretaries/ CsiT/ Directors/ Deputy Secretaries/ Under Secretaries, CBDT.
5. C&AG oflndia (30 copies).
6. JS & Lega l Adviser, Ministry of Law & Justice. New De lhi.
7. Institute of Chartered Accountants of India.
8. CIT (M&TP). Official Spokesperson ofCBDT.
9. ADG (Systems) -4 for uploading on departmental website.
10. JClT, Database Cell for up load ing on irsofficersonline.gov.in.
II. All PrCCITs.

(Yip
~> ul Agarwal)
Director (TPL-[), CBDT

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