All registered charities and religious organizations under Section 12A (Trusts and Institutions registered before 1996), Section 12AA (Trusts and Institutions registered after 1996), Section 10 (23C) and Section 80G will have to re-apply for re-registration. A clear provision has been made in this meaning that being registered under section 12AA means that the income tax officer said that the trust or institution is “established for charitable purposes” and therefore the trust or institution is not required to pay income tax as per other terms and conditions under the Act. Section 80G - Opportunity for donors to save tax The trust or organization is required to formally apply by filling up Form 10A with or after registration in the prescribed form under section 80G. Registration means that the trust or organization will not be eligible to receive donations under Section 80G and the donor will not be eligible for deduction from income as the 80G certificate will no longer be valid and will be valid for five years only. It is a well known fact that registration under 80G does not directly benefit the trust or organization. However, it is important to note that raising money can be beneficial. Donors contributing to a trust or organization registered under section 80G are entitled to a tax deduction. In other words, registration under section 80G is an opportunity for donors to save on taxes, so they make donations and help the trust raise money. This should be kept in mind. Re-validation process of existing registrations The re-validation process of existing registrations will be online and the new online form will specifically focus on whether the charitable activities of a trust or organization are truly charitable. Once the online form is ready, the facility will be made available under a three-month one-stop shop scheme through which the application has to be submitted. Trusts and institutions can file these themselves or through their auditors or with the help of chartered accountants. Certification is now required every five years After processing the application, the registration of the eligible trust or institution under section 12AA and 80G can be re-validated by the Income Tax Officer for a period of five years. From now on, it is mandatory for every trust or institution to apply for renewal every five years and the requirement to apply for renewal must be made at least six months before the expiry of the validity period of five years. Temporary registration facility for newly established trusts and institutions Newly established trusts and institutions will be granted temporary registration after applying for registration under the Income Tax Act and will be valid for three ‘assessment years’ from the year the registration is sought. Thereafter, the renewal application can be submitted at least six months before the expiry of the seasonal registration validity period and it is provided that the approved registration will be for five years. Application can be made for permanent registration (instead of temporary registration) at any time after the commencement of the objective work of the organization during this period of three years and if the objective work has not started even after the period of three years of temporary registration, re-registration can be done for three years. Proposed national listing of all charities and religious institutions The Government of India is proposing to compile a national list of all charities and religious organizations and the Income Tax Department will give a unique identification number to all charities and religious organizations and this number will be considered as the identity of the organization or trust. And this information will be available on the website of the Income Tax Department. The original purpose of making such a list is that the registration certificate of the Income Tax Department of the organization is sometimes not found or missing and a copy is not even available with the Income Tax Department. In this case, the taxpayer is very upset. This is one hundred percent possible in case of registration of old institutions and this measure is welcome to avoid disputes arising out of it and removes many taxpayers' grievances. Selection of one of the sections 12AA or 10 (23C) is required: Currently, many hospitals, schools and colleges are registered simultaneously under Section 10 (23C) and Section 12AA. Most of the time, if such organizations are denied tax exemption under section 10 (23C), they can avail tax exemption under backup registration of 12AA. As per the new changes, these hospitals, schools, colleges, charities have been given the option to register under either section 10 (23C) or section 12AA under any one section. It has been clarified that registration under these two sections is prohibited at the same time or later. New provision for preparation and filing of statement of donations Statements of donations received by each registered charitable trust or institution are required to be submitted in the prescribed format. In this return, it has been clarified that the benefit of Section 80G will now be available to the donors on the basis of the information of the taxpayers related to the donation. At present, it has been observed that many taxpayers misrepresent donations made under Section 80G to show less income as it is impossible to verify each of these donations tax-wise and therefore, even if the taxpayer seeks deduction under 80G, the trust or institution will deduct it without confirmation. This now indicates that it will not be done. If the lower rate tax system is chosen, the deduction under section 80G is unavailable It has been clarified that the deduction under section 80G will not be available to the taxpayers (individuals or companies) who opt for the new lower rate tax system. All these changes will be effective from June 1, 2020.