Time Limit for Registration of Trust or Institution held for Charitable Purpose under Income Tax Act

NGO (Non Government Organization) or NPO (Non Profit Organization) are the categories of Entities which can be created for the purpose of carrying of certain activities with pre-defined goals. In India, the NGO or NPO can be created in three different forms i.e. Society, Trusts or Section 8 Company. All these entities are governed by different laws and acts. However, for the purpose of Income Tax Act, there is not a significant difference between all of them, because the provisions of Trust or Institutions i.e. (Societies, Trust, Sec. 8 Company, AOP, etc) are governed by the issuance of Certificate of Registration u/s 12AA of the Income Tax Act, 1961.


Thus, we can say that each and every Trust or Institution which is registered under Section 12AA of the Income Tax Act, 1961 are recognized as the Registered Trust or Institution which are held for Charitable Purposes and the Income or Receipts deprived form them is exempt from Income tax subject to fulfilment of certain provisions of the Act.


In today's context, we are discussing about the Time Limit for Registration or Making Application for Registration of Trust or Institution held for Charitable Purposes under the Income Tax Act.


The Procedure of Registration is defined under section 12AA of the Act, whereas the Provisions of Time Limit is governed by Section 12A of the Act, which is reproduced as below for ready reference.


12A. Conditions for applicability of Sections 11 and 12

(1] The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:—


(a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Principal Commissioner or Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12AA :


Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,—


(i) from the date of the creation of the trust or the establishment of the institution if the Principal Commissioner or Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons;


(ii) from the 1st day of the financial year in which the application is made, if the Principal Commissioner or Commissioner is not so satisfied:


Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007;


From the plain reading of the Section 12A, it is clearly understood that the Application for Registration of the Charitable Trust or Institution is required to be made on or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution. But, w.e.f. 01.04.2007, the second Proviso to Section 12A has been inserted to nullify the condition for the time limit of 1 year for Registration of Charitable Trust or Institution from the date of creation.


Therefore, after 01.04.2007, there is no time limit for the Registration of Charitable Trust or Institution for the purposes of Section 12AA of the Income Tax Act.

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