Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

The Act puts in place two main regimes for trusts or funds or institutions to claim exemption. The first is contained in the provisions of sub-clause(s) (iv), (v), (vi) or (via) of clause (23C) of section 10. The second is contained in the provisions of sections 11 to 13 of the Act. The provisions of the respective regimes lay down the procedure for filing application for approval/ registration, the conditions subject to which such approval/ registration shall be granted or can be withdrawn etc.

2. As both the regimes intend to grant similar benefit, the procedure and conditions across the two regimes have been aligned, over the last few years, vide successive Finance Acts.

3. In order to take forward the process of simplification of procedures and to reduce administrative burden, it is proposed that the first regime be sunset and trusts, funds or institutions be transited to the second regime in a gradual manner.

4. It is, therefore, proposed that:

• Applications seeking approval or provisional approval under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10, and filed on or after 1st October, 2024, shall not be considered.

• Applications filed under these sub-clauses before 1st October, 2024, and which are pending would be processed and considered under the extant provisions of the first regime itself.

• Approved trusts, funds or institutions would continue to get the benefit of exemption, as per the provisions of sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10, till the validity of the said approval.

• They would be eligible to apply for registration, subsequently, under the second regime. Amendments have accordingly been proposed in section 12A.

• Certain eligible modes of investment, under the first regime (viz. those specified in clause (b) of third proviso to clause (23C) of section 10) shall be protected in the second regime, by way of amendment in section 13.

5. These amendments will take effect from the 1st day of October, 2024.

[Clauses 4, 6 & 9]

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Full Text:

Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

Charitable trust regime consolidation: transition to unified registration framework with phased sunsetting and protected investment modes retained. The proposal phases out the approval route under sub clauses (iv), (v), (vi) and (via) of clause (23C) of section 10 by preventing consideration of applications filed on or after 1 October 2024, while allowing pending applications and existing approvals to continue under the first regime; approved entities may later apply for registration under the sections 11-13 framework, with amendments preserving certain eligible investment modes and enabling the transition.