Trust Registration with Income Tax

​​Introduction

Trusts are formed for charitable or religious purposes which are not intended to do commercial activities are allowed various benefits under the Income-Tax Act, inter-alia, exemption under section 11.

The term religious purpose is not defined under the Income-Tax Act. However, Section 2(15)​ of the Act defines “charitable purpose" to include relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility.

Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless—

(i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and

(ii) the aggregate receipts from such activity or activities during the previous year, do not exceed 20% of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;

Registration

​​​​​​​Is registration of a trust mandatory?

It is optional, mandatory for a trust to get the registration under Section 12AA of the Income-tax Act, 1961 only as to claim exemption under Section 11.

When a trust can apply for registration?

There is no time-limit to apply for the registration. However, if application for registration as trust has been made on or after June 1, 2007, the exemption would be available only from the financial year in which such application is made.

However, exemption to a trust could not be denied in respect of earlier assessment years (for which the proceedings are pending before the Assessing Officer) provided that objects and activities of the trust for such preceding assessment years were same.

Form to be used to apply for registration?

A trust is required to apply online for registration in Form No. 10A.

Documents to be furnished along with application form?

The documents which are required to be furnished along with application Form No. 10A are as follows:

(a) where the trust is created, or the institution is established, under an instrument, self-certified copy of the instrument creating the trust or establishing the institution;

(b) where the trust is created, or the institution is established, otherwise than under an instrument, self-certified copy of the document evidencing the creation of the trust, or establishment of the institution;

(c) self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be;

(d) self-certified copy of the documents evidencing adoption or modification of the objects, if any;

(e) where the trust or institution has been in existence during any year or years prior to the financial year in which the application for registration is made, self certified copies of the annual accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up; note on the activities of the trust or institution;

(f) self-certified copy of existing order granting registration under section 12A or Section 12AA, as the case may be; and

(g) self-certified copy of order of rejection of application for grant of registration under section 12A or Section 12AA, as the case may be, if any

Some important points

 As of yet, the benefit of 12A registration is not applicable to private or family trusts.

Following is the step wise process for online 80G registration of Trust:

✓ Login with your regular Income tax Login and Password

✓ Select e-File- Income Tax Forms

✓ At the next screen PAN would be automatically prefilled 

✓Form Name- Form 10G- Application u/s 80G (5) (vi) {Charitable Fund/ Institution}-  submission mode- then Select- Prepare & Submit Online and click on Continue ( Please note "Select Form as per your Trust Deed and Requirement")

✓ Proceed to fill form G

✓Part A- Here some details in Part A would get prefill- Now- Select- Respective Post Office

✓ Part B- Legal Status- There are 7 options available in Legal Status- – Select- Constituted as Public Trust- under- societies registration act or section 8 company or a university established by law etc

✓ Part C- Select Purpose- 7 Options will be available-  We have to Select as applicable (like releif of the poor or education or yoga etc.) and click on add, once you select so that you can add other objectives too as per your Trust Deed

✓ at column 1a) In case of "advancement of any other object of general public utility”- We  have to select Yes/ No as relevant if yes provide Details for the same

✓ Part D-  Details of Author/ Founder/ Settlor & Part E- Details of Trustees (All Trustees)

✓ Part F- Part 1-Exemptions/ Approval/ Registration Details- You will have to select from 17 Options whichever is relevant also Status of approval is to be selected as per relevance- Section 11 is for General Exemption and select status as is relevant if approved/ applied / registered under section 12AA

✓ Part F- Part 2-  Select Section 12A/12AA as is relevant to you enter Registration No and Date of Registration

✓ Part G- Details of Business- As applicable Select Yes/ No if say yes then income details etc and Part- H- Details of Demand- As applicable Select Yes/ No

✓ Part I- Details of Religious Expense if any – Select Yes/ No as applicable if Yes provide details

✓ Part- J- Miscellaneous

    Irrevocable clause- Select – Yes- Select- relevant Section and status and fill in the order No, order date and Authority- ( ** Note- these details you will received from     12AA Order)

✓ Verification and other Details- Fill in the relevant details- Preview and Submit-Upload relevant Documents-  Download Form Print the same.

Rest details will continue in Part-2