Form 10A

What is Form 10A?

Form 10A is an essential application form required for trust registration under Section 12A and re-registration under Section 12AB of the Income Tax Act. It is a crucial document that helps trusts, NGOs, and non-profit organizations obtain tax exemption for trusts, ensuring that their income is not taxed like regular business income.

Earlier, trusts and non-profit organizations were registered under Section 12AA. However, due to the Finance Act of 2020, the process was revised, and Form 10A is now required for new trust registrations and re-registrations under Section 12AB. This change aims to streamline the trust registration process and enhance transparency in the taxation system.
 

Who Needs to File Form 10A?

Filing Form 10A is mandatory for organizations seeking trust registration and tax exemption under the Income Tax Act. The following entities must submit Form 10A,

• Newly established charitable and religious trusts seeking tax exemption under Section 12A.
• Existing trusts previously registered under Section 12AA now require re-registration under Section 12AB.
• NGOs, societies, and non-profit organizations that wish to apply for tax benefits.
• Trusts seeking approval under Section 80G to enable donors to claim tax deductions for charitable donations.
• Educational institutions and hospitals operating under a charitable status require tax benefits for their activities.

Failing to file Form 10A on time may result in the loss of trust tax exemptions, affecting the ability to receive tax-free donations and maintain Income Tax Act compliance for trusts.
 

Documents Required for Form 10A Application

To complete the trust registration process, applicants must provide specific documents to support their application. 
The following is a detailed list of essential documents required for the Form 10A application process,

• Trust Deed or Memorandum of Association (MoA): The legal governing document that defines the objectives, rules, and regulations of the charitable trust or religious trust.
• PAN Card of the Trust: The Permanent Account Number issued by the Income Tax Department for tax identification purposes.
• Registration Certificate: A legally recognised certificate proving registration under the Societies Registration Act, the Indian Trusts Act, or the Companies Act (for Section 8 companies).
• Details of Trustees or Governing Body Members: Including PAN details, Aadhaar numbers, and contact details of all key members managing the trust.
• Financial Statements: If applicable, audited financial statements for the past three years must be provided. Newly established trusts may need to provide a projected income and expenditure statement.
• Activity Report: A summary outlining the objectives, nature of activities, and plans of the charitable trust or NGO.
• Form 10AB (if applicable): In case of re-registration, submission of Form 10AB is required for trusts that have already obtained Section 12AB registration.

Ensuring that all documents are accurate, up-to-date, and correctly formatted will help avoid delays or rejections during the Form 10A filing process.

In addition, trusts must comply with the eligibility criteria for trust registration under the Income Tax Act to successfully obtain tax exemptions. Failure to provide the required documentation may lead to processing delays and potential rejection of the application.
 

Step-by-Step Process for Filing Form 10A

The application for Form 10A must be submitted electronically via the Income Tax Department’s e-filing portal. Filing Form 10A accurately is essential to secure trust registration, obtain tax exemption for trusts, and ensure compliance with the Income Tax Act. 

Below is a detailed breakdown of the process to help trusts, non-profit organizations, and charitable institutions complete their registration smoothly.

Step 1: Log in to the Income Tax e-Filing Portal

• Visit the official Income Tax Department website (www.incometax.gov.in).
• Use the registered PAN credentials of the trust to log in.
• If the trust is not yet registered on the portal, create an account first.

Step 2: Access the Form 10A Application

• Now go to the ‘e-File’ menu and select ‘Income Tax Forms.’
• Choose Form 10A from the list and select ‘Apply’ under Section 12A or Section 12AB, depending on the trust’s status.

Step 3: Fill in the Required Details

• Provide accurate information regarding the trust’s name, date of establishment, PAN, registration details, and objectives.
• Mention whether it is a charitable trust registration or a religious trust registration to ensure proper classification under the Income Tax Act.

Step 4: Upload Supporting Documents

• Attach the necessary documents, including the Trust Deed, PAN card, financial statements, and activity report.
• Ensure documents are uploaded in the specified format (PDF or scanned images).

Step 5: Verification and Submission

• Authenticate the form using a Digital Signature Certificate or Electronic Verification Code.
• Cross-check all details before submitting, as errors can delay approval.

Step 6: Acknowledgment Receipt

• Upon successful submission, an acknowledgement number is generated.
• This number is essential for tracking the Form 10A application process until approval is granted.
   

Processing and Approval of Form 10A

Once the application is submitted, the Income Tax Department reviews the details provided. The processing time varies, but the following steps typically occur,

Scrutiny and Verification

• The department verifies the authenticity of the trust’s documents and activities.
• If additional information is needed, a notice is sent to the applicant.

Approval Under Section 12AB

• If the application meets all compliance requirements, the trust is registered under Section 12AB, granting tax-exempt status for five years.
• A certificate of registration is issued, which must be renewed periodically.

Possible Rejection or Queries

• If discrepancies are found in the trust registration process, the application may be rejected or sent back for corrections.
• Incomplete applications or incorrect documentation can result in delays or denials.
   

What Happens if a Trust Does Not Register?

Failure to register a trust under Section 12A and Section 12AB can have serious financial and operational consequences. Without registration, the trust cannot avail of non-profit organization tax benefits, and its income will be subject to taxation.

Key Consequences of Non-Registration:

Taxation of Trust Income

• Any income earned by the trust will be taxed as per standard Income Tax Act rates.
• This significantly reduces the funds available for charitable purposes.

Loss of Donor Benefits

• Without Section 80G approval, donors cannot claim tax deductions for charitable organizations, making it harder to attract funding.

Legal and Compliance Issues

• The trust may face penalties or restrictions if found non-compliant with tax regulations.
• In some cases, legal action may be taken against unregistered trusts operating under charitable claims.

To avoid these issues, trusts must complete the trust re-registration process on time and ensure compliance with Income Tax Act regulations.
 

Renewal of Trust Registration Under Section 12AB

Under the latest guidelines, trust registration is valid for five years and requires renewal to continue enjoying tax exemption for trusts. The renewal process involves filing Form 10AB at least six months before the expiration date.

Steps for Renewal:

Gather Updated Financial Documents

• Maintain audited accounts of the trust’s activities for the last three years.
• Prepare an updated activity report detailing charitable work undertaken.

File Form 10AB Online

• Log in to the Income Tax e-filing portal and select Form 10AB.
• Enter the latest details of the trust, including financial transactions and governance changes.

Submit the Application and Track Status

• Ensure all documents are attached correctly and submit the form.
• Use the acknowledgement receipt to track the application status.

Failure to renew registration on time may lead to suspension or revocation of the trust’s tax exemption status.
 

Section 80G and Its Benefits for Donors

While registering under Section 12A secures trust registration, obtaining Section 80G approval enhances fundraising opportunities. Section 80G provides tax relief to donors, encouraging more contributions towards charitable causes.

Advantages of Section 80G Approval:

Encourages More Donations

• Donors can claim tax deductions, making charitable giving more attractive.

Increases Trust Credibility

• Registered trusts are seen as compliant and transparent, boosting public confidence.

Attracts Corporate Sponsorships

• Many businesses prefer donating to NGOs and trusts registered under Section 80G for tax benefits.

Applying for Section 80G alongside trust registration enhances funding opportunities and promotes long-term sustainability.
 

Compliance Requirements for Trusts

To maintain tax-exempt status, trusts must comply with key legal and financial regulations. Compliance ensures smooth operations and prevents potential penalties or registration revocation.

Essential Compliance Measures:

Filing Annual Tax Returns

• Trusts must submit Form ITR-7 annually to the Income Tax Department.

Maintaining Proper Books of Accounts

• All financial transactions must be recorded accurately to ensure transparency.

Utilising Funds for Charitable Purposes Only

• Any deviation from the stated objectives can lead to loss of tax benefits.

Regular Audits

• Conduct periodic audits to verify financial compliance and ensure proper fund allocation.

Non-compliance can lead to serious consequences, including loss of tax exemption for trusts and legal action.
 

Wrapping Up!

Understanding and filing Form 10A correctly is essential for trust registration and tax exemption under the Income Tax Act. Whether you are establishing a new trust or renewing an existing registration, following the correct procedures ensures compliance and smooth operations.

By securing registration under Section 12A and Section 80G, trusts can enjoy tax benefits while gaining credibility among donors and regulatory authorities. Staying compliant with tax laws, maintaining financial transparency, and renewing registrations on time will help the particular trust focus on its mission without legal hurdles.