Charitable Trust Registration: 12A, 80G and Staying Compliant
Setting up a charitable trust or society is the easy part. Keeping its tax-exempt status intact requires a compliance rhythm that many organisations discover only after a registration lapses.
What each registration does
- Section 12A / 12AB registration exempts the trust's own income from tax, provided the income is applied to its objects. Without it, a trust is taxed like any other entity.
- Section 80G approval lets your donors claim a deduction on what they give you. It does nothing for the trust's own tax position — but it materially affects your ability to raise funds.
They are separate applications with separate approvals, and one does not imply the other.
Registration is no longer permanent
This is the single most important change for existing trusts. Registrations that were once granted in perpetuity now operate on a fixed-term cycle requiring periodic revalidation. Provisional registration is granted first for new entities, converting to regular registration on application within the prescribed window after activities commence.
Miss the renewal window and the exemption does not merely pause — the trust can face taxation on its accreted income. Diarise the expiry date the day the certificate arrives.
Applications and documentation
Applications are made in the prescribed form on the income tax portal, supported by:
- The trust deed, or the memorandum and rules for a society or Section 8 company
- Registration certificate with the Charity Commissioner or Registrar
- PAN of the entity
- Accounts for the preceding years where activities have commenced
- A note on activities actually carried out, not merely the objects clause
Officers increasingly probe whether stated objects match actual activity. A trust whose deed describes education but whose expenditure is largely administrative should expect questions.
The annual compliance rhythm
- Books of account, maintained properly and separately for each activity where required
- Audit in the prescribed form where income exceeds the exemption threshold before applying exemption
- Return of income filed by the applicable due date — mandatory even where the entire income is exempt
- Form 10BD, the statement of donations received, and Form 10BE, the certificate issued to donors. Donors cannot claim their 80G deduction unless the trust files 10BD accurately with correct donor PANs.
- Where income is accumulated rather than applied, the prescribed declaration must be filed within time
The 85% application rule
A trust must apply at least 85% of its income towards its objects during the year. Shortfalls can be accumulated for specified purposes, but only if the correct form is filed in time and the accumulation is used within the permitted period. Accumulation that is neither applied nor properly declared becomes taxable.
Foreign contributions
If you intend to receive donations from outside India, FCRA registration or prior permission is a separate requirement entirely, with its own designated bank account, reporting and renewal obligations. 12A and 80G do not cover it.
Setting up a trust, due for revalidation, or behind on Form 10BD? Talk to Kunal P Shah & Co — we advise charitable trusts and Section 8 companies on registration and ongoing compliance.