To simplify compliance for smaller trusts, the government has proposed an amendment to Section 12AB of the Income Tax Act, extending the registration validity from 5 years to 10 years, subject to specific conditions.

Eligibility Criteria

• Applicable to trusts or institutions applying under sub-clause (i) to (v) of Section 12A(1)(ac).
• Income Threshold:
  • If total income (before exemptions under Sections 11 and 12) does not exceed ₹5 crores during each of the two previous year, preceding to the previous year in which such application is made., the trust qualifies for a 10-year renewal.
  • If income exceeds ₹5 crores, the trust will be classified as a larger entity and will be eligible for a 5-year renewal instead.

Key Compliance Changes

• Reduced administrative burden by eliminating frequent renewal requirements.
• Greater stability, allowing trusts to plan charitable activities efficiently.
• Clear renewal guidelines, with the registration certificate specifying the expiry date.

Renewal Process

• Trusts must apply for renewal before the expiry of their registration based on income eligibility.
• If the ₹5 crore threshold is met, a 10-year renewal will be granted.
• If income exceeds ₹5 crores, renewal will be limited to 5 years.

Effective Date

These amendments will take effect from the 1st day of April, 2025.