All NGOs need to reapply for 12A / S.80 G certificates
EXISTING NGOS
Budget 2020 has brought bad news to all non-profit organizations, everyone would need to reapply for renewal of 12AA & 80G and S.10(23C) certificates. Let’s deal with each one of these registrations separately. In today’s post, position of existing NGOs is being covered, who already hold these registrations.
Certificate under 12AA
As all of us know, all non-profits who want their income exempt from Income Tax have to hold certificate under S. 12AA. This makes their income exempt from taxation, as long as they comply with S.11 conditions of Income Tax Act. Under the proposed budget provision, Section 12AA has been withdrawn and new Section 12AB has been inserted. As per this section all those holding certificates issued under 12AA or 12A would need to reapply for the certificates within 3 months of the section 12AB becoming effective. Thus all existing NGOs would need to apply for renewal of exemption certificate under S.12AB within 3 months of the notification date.
The new certificate will be applicable from the Assessment Year from which the registration was issued originally. There is confusion based on drafting of the Budget provision, since it says that the certificate would be applicable for 5 years, however if an NGO’s original S.12AA certificate was effective say in 2010, then would it expire in 2015. We are sure that is not the intention and hopefully necessary correction would be incorporated in the certificate, ensuring 5 year’s from the date of current application.
The good thing is that the Income Tax Dept would need to decide about certificate within 3 months from the date applied.
Certificate under S.80G
Similarly a new application would need to be made for obtaining a new certificate under S.80G within 3 months of the notification notifying this clause becoming effective. Thus an application would need to be moved for obtaining a new certificate under this section.
Certificate under S.10(23C)
All entities holding registration under S.10(23C) would similarly need to reapply for a certificate under the new amended S.10(23C). Provisions are similar lines as described above for S.12AA certificate, that is, to be applied within 3 months from the date of notification, and decision to be given within 3 months of receipt of application. In case an NGO presently has both the S.10(23C) as well as S.12AA certificate, then S.12AA certificate would become inoperative.
Provisions for New NGOs would be covered in next post.
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Socio
Research & Reform Foundation (NGO)
512 A,
Deepshikha, 8 Rajendra Place, New Delhi – 110008
It is old incorporated NGOS burden
This notification which date applicable means this time line when start…. April 2020 or before
From the date when Govt issues notification making the section operative. All in the NGO community are waiting for that notification. SRRF will inform as soon as the notification comes. An NGO would need to apply within 3 months of that Notification.
NGOs will be asked to apply within 3 months, likely to be effective 1st June 2020. Thus you should get time till 31st Aug 2020.
What is the date of notification likely to be? Any idea?
A budget proposal or Finance Bill becomes effective from 1st April, after it is passed by the parliament. Hence once the Bill is passed b y the parliament, anytime after that concerned ministry would come out with Notifications making various amendments in the Income Tax Act 1961 operative.