Small Charitable Trusts, institutions - Validity of registration u.s. 12A and /or approval u.s. 80G is statutorily extended. Suggested draft letter to the concerned CIT (Exemptions).

Small Charitable Trusts, institutions - Validity of registration u.s. 12A and /or approval u.s. 80G is statutorily extended. Suggested draft letter to the concerned CIT (Exemptions).

Through the Finance Act, 2025 amendment was made to extend the period of validity of registration of small trusts. The Income tax Act, 2025 also contain similar provisions in this regard.

Incidentally we find that Income Tax Act, 2025 (effective from 01.04.2026) was also assented by the President of India on 21-8-2025. This is before the last date to make application for renewal i.e. 30.09.2025, in cases where registration and approval are valid till 31.03.2026. Application for approval w.e.f. 01.04.2026 ( AY 2027-28) is therefore required to be made under the Income Tax Act, 2025.

In view of author, in case of small trusts, as defined, broadly speaking having gross receipts below Rs.5 crores, were exempted from making application and seeking registration and their period of approval was extended to ten years from originally granted three or five years. Therefore, such institutions need not to make application for registration and / or approval. This view find support from circular 2/ 2005 in nature of FAQ.

CBDT's clarificatory circular is desired:

Author also request the CBDT to issue circular and further clarification to make it clear that such eligible small trusts and institutions are not required to make an application for registration and approval, and that the same are statutorily extended.

This will in true sense avoid administrative work of such trusts and it will also save lot of time of IT authorities.

Therefore, author suggest that a letter to concerned authority can be written. A draft of such letter is appended below.

From: ...... Trust PAN

Before the concerned PCIT/ CCIT/ CIT ( Exemption)

Respected sir,

Regarding extension of validity of registration u.s. 12A and approval u.s. 80G.

We have been granted registration and approval with a validity period of five years from AY 2022-23 to 2026-27.

Vide Circular (FAQ) form titled Personal Income-tax reforms with special focus on middle class - FAQ Dated: 01-02-2025 it is clarified vide answer to Q.2 of FAQ no.7 as follows:

FAQ.7: Rationalization of the provisions relating to Charitable Trusts and

Q.2. What amendment has been caried out in respect of registration of trusts?

Ans. The period of validity of registration of trust or institution with income below Rs 5 Crore has been increased from 5 years to 10 years in certain cases.

Q.3. Which cases shall benefit from above amendment?

Ans. The amended provisions shall be applicable to certain small trusts or institution whose total income does not exceed Rs. 5 crores in each of the two previous years, preceding the previous year in which application is made.

We understand that the above circular is favourable to assessee and is binding upon IT authorities.

Screen shot showing one of source of IT department and relevant page of circular is given below:

From:

https://www.incometaxmumbai.gov.in/wp-content/uploads/2025/02/faqs-on-personal-income-tax-reforms-with-special-focus-on-middle-class.pdf

The above circular is also found at

https://www.taxtmi.com/circulars?id=68100&page=1&lawId=17&searchIn=aiMain&sort=default&allSearchQueries=small+charitable+trusts-+relaxation

Relevant portion from speech of honourable Finance Minister on 01.02.2025 while presenting budget of 2025 is as follows:

Reducing Compliance Burden

142. I propose to reduce the compliance burden for small charitable trusts/institutions by increasing their period of registration from 5 years to 10 years.

3. Simplification of tax provisions for charitable trusts/institutions:

• It is proposed to increase the period of validity of registration of trust or institution from 5 years to 10 years for smaller trusts or institutions.

Unquote:

In view of above, amended provisions, and clear purpose of amendment, we understand that validity of our registration and approval has been statutorily extended with a validity period of ten years i.e. up to 31.03.2031 and any application in this regard is not required to avoid administrative burden on assessee and tax authorities.

We have regularly filed our Return of Income up to AY 2025-26 and we will file Return of Income for AY 2026-27 when relevant income tax return form and filing utility is made available on portal of department.

In case we have to submit any documents, kindly inform us and allow us reasonable time for compliance.

Thanking you,

Yours faithfully,