GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

NOTIFICATION

New Delhi,  October ..... , 2018

S.O. (E) - In exercise of the powers conferred by the first proviso to clause (23C) of sub-section (1) of section 10 and clause (vi) of sub-section (5) of section 80G read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1.  (1) These rules may be called the Income-tax ( ... th Amendment) Rules, 2018.

      (2) They shall come into force from the date of its publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereafter referred to as the principal rules), in Part IV,-

(i) for 'rules 2C and 2CA', the following rule shall be substituted, namely:-

"Application for the purpose of grant of approval for the exemption under sub-clauses (iv), (v), (vi) and (via) of clause (23C) of section 10.

2C. (1) The prescribed authority under sub-clauses (iv), (v), (vi) and (via) of clause (23C) of section 10 shall be the Principal Commissioner or Commissioner whom the Central Board of Direct Taxes may authorise to act in this behalf.

(2) An application for grant of approval for the exemption under sub-clause (iv), sub-clause (v), sub-clause (vi) and sub-clause (via) of clause (23C) of section 10 to any other fund or institution, any trust (including any other legal obligation) or institution, any university or other educational institution, and any hospital or other institution (hereinafter 'the applicant') shall be made in Form No. 56 and accompanied by the following documents, namely:-

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

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

(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) where the applicant has been in existence during any year or years prior to the financial year in which the application is made, self-certified copies of its accounts and balance sheet (audited accounts and balance sheet along with the audit report, where audit is required under the relevant laws) for the preceding three previous years or since inception, whichever is less; along with a note on the activities as reflected in the accounts and the annual reports with special reference to the appropriation of income towards purposes of the applicant, if applicable;

(e) where the applicant has been granted approval under section 80G, self-certified copy of the order granting approval under section 80G;

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

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

(h) note on the activities of the applicant; and

(i) copy of application in case applied for registration under section 12AA or for approval under section 80G, as applicable.

(3) Form No. 56 shall be furnished electronically,-

(i) under digital signature, if the return of income is required to be furnished under digital signature;

(ii) through electronic verification code in a case not covered under clause (i).

(4) Form No. 56 shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the assessee.

(5) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall specify the data structure, standards and procedure of furnishing and verification of Form No. 56 and be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said form so furnished .".

(ii) for 'rule 11 AA', the following rule shall be substituted, namely:-

"Requirements for approval of an institution or fund under section 80G.

11 AA (1) For approval under clause (vi) of sub-section (5) of section 80G, the institution or fund (hereinafter 'the applicant') shall be required to file application in Form No 10G, accompanied by the following documents, namely:-

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

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

(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) where the applicant has been in existence during any year or years prior to the financial year in which the application is made, self-certified copies of its accounts and balance sheet (audited accounts and balance sheet along with the audit report, where audit is required under the relevant laws) for the preceding three previous years or since inception, whichever is less; along with a note on the activities as reflected in the accounts and the annual reports with special reference to the appropriation of income towards purposes of the applicant, if applicable;

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

(f) self-certified copy of order granting approval under sub-clause (iv), sub-clause (v), sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, as the case may be, if any;

(g) self-certified copy of order rejecting the application for grant of approval under section 80G, if any;

(h) note on the activities of the applicant; and

(i) copy of application in case applied for registration under section 12AA or for approval under sub-clause (iv), sub-clause (v), sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, as applicable.

(2) Form No 10G shall be furnished electronically,-

(i) under digital signature, if the return of income is required to be furnished under digital signature;

(ii) through electronic verification code in a case not covered under clause (i).

(3) Form No. 10G shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the assessee.

(4) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall specify the data structure, standards and procedure of furnishing and verification of Form 10G and be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said form so furnished.

(5) The Principal Commissioner or Commissioner may call for such further documents or information from applicant or cause such inquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of the applicant.

(6) Where the Principal Commissioner or Commissioner is satisfied that all the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are fulfilled by the applicant, he shall record such satisfaction in writing and grant approval under clause (vi) of sub-section (5) of section 80G.

(7) Where the Principal Commissioner or Commissioner is satisfied that one or more of the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are not fulfilled, he shall record the reasons in writing and reject the application for approval after giving the applicant an opportunity of being heard.

(8) The order granting approval under clause (vi) of sub-section (5) of section 80G or rejecting the application shall be passed within the period of six months from the end of the month in which such application was received.".

3. In the principal rules, in Appendix II,-

(i) for 'Forms Nos. 56 and 56D', the following Form shall be substituted, namely:-

[Notification No. /2018/ F. No. 370133/16/2018-TPL]

(Niraj Kumar)

Under Secretary (Tax Policy and Legislation)

Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969 (E) dated the 26th March, 1962 and were last amended vide notification number ..... , dated ..... , ............ , 2018.

Income tax draft rules require electronic Forms 56/10G, document attachments, verifier checks and six-month decision timelines for charity approvals. The amendments create electronic application procedures for tax-exemption approvals for funds, trusts, educational and hospital institutions via Form No. 56 and Form No. 10G, require specified supporting documents (instrument of creation, registration certificates, audited accounts, prior approval/rejection orders, activity notes), mandate verification by the authorised return verifier, assign data structure and security responsibilities to the tax systems authority, empower the Commissioner to seek further information and record reasons in writing, and require that approval or rejection orders be issued within six months.