Finance Act, 2020 has imposed extra burden of compliances on Trust and NGO’s. As per the new provisions of this Act, all the Charitable Trusts and NGO and Section 8 Companies are required to re-register with the Income Tax Department within a time period of 3 months starting from June 1, 2020.

All the above said entities need to obtain the approval for Section 80G within the said time period starting from June 1, 2020. In case where the above said entities have changed their objects then in that case also they need to re-register themselves.

Income Tax commissioner’s power have been increased by the new provisions of this Act. Under the new provisions, Income Tax commissioner’s will be having all the powers to cancel the registration of a Trust or NGO’s, if the activities performed by them is not on a same page as mentioned in its objectives.

Under the new provisions, reporting of all the donations to the Income Tax Department is made stricter and heavy fines are imposed for any failure.

Highlights of the Amendments

Mandatory Re-Registration of the Trust/NGO/Section 8 Companies:

Under the new provisions, all the existing Trusts, charitable or religious organizations which were previously registered under Section 12A, Section 12AA, Section 10(23C), Section 80G are required to re-register under section 12AB compulsorily. Section 12AA which was earlier dealing with the registration process will not be effective from June 1, 2020 and will be replaced by a new section 12AB. The application for the new registration should be made within a time period of 3 months starting from June 1, 2020. Principal Commissioner will be granting the registration and the same shall be enforced for a period of 5 years. If the application for re-registration within the said time period is not done, the same will stand as cancelled after the expiry of 3 months time period i.e. August 31, 2020. Moreover, the entities who want to renew their registration, they will have to apply for this at least six months prior to the expiry of the existing registration which is 5 years. 

Further, these entities shall be paying taxes on the total fair market value of their total assets as on August 31, 2020 as per the section 115TD of the Act.

Mandatory Re-application for Section 80G approval

It has been made clear in the budget that all existing Trusts/NGO’s/Institutions which already had approval under the section 80G  of Income Tax Act, shall now be COMPULSORILY required to re-apply to obtain approval under Section 80G.

This process of re-application is to be done within a time period of 3 months starting from June 1, 2020. This fresh approval will be valid for 5 years and renewal application is required to be submitted at least six months prior to the expiry of the existing registration which is 5 years.

Mandatory filing of Donation returns received

Every single trust or such institution which is approved under the Section 80G of the Income Tax Act,1961, is required to file a statement of Donation received and will also be issuing a certificate to the donor. In case of any delay in the filing process, a late fee shall be applicable with a penalty ranging from Rs. 10,000 to Rs. 1 Lakh.

Change in Objects

In case the Trust or such institutions has modified or altered its original objectives on the basis of which the initial registration was permitted, then such entities will be required to re-apply from scratch for registration within a stipulated time period of 30 days starting from the date of said modifications.

Cancellation of Registration

Under the new provisions, if the Income Tax Commissioner finds that the Trust or the institutions are performing such activities which are non-genuine or the activities differ from the objectives mentioned of the Trust or in case where these entities are ineligible for exemptions under Section 11 or Section 12 in the view of the violation under section 13(1) or the entity has failed to comply with any other law for the time, then in such cases, the commissioner is empowered to cancel the registration of such entities.


These provisions are added or modified to improve the functioning of the trusts or NGO’s, will bring more transparency in their activities. Compliance of every single norms will be further strengthened by these provisions. Income Tax Commissioner has been further enforced with new powers. One has to be extremely careful while running these institutions as even minor lapses on their part can cause a cancellation of the registration.

Edited by Minu Mishra

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