What Are The Amendments To Trust Taxation in India?

With the effect of recent changes that have been brought up by the financial act 2020 in the domain of taxation specifically related to trust registered under the 12AA and educational institutions under the 10(23C). 

Any business must file their ITR (income tax return) if it is applicable. Businesses must opt to file GST return online if the turnover is exceeding the threshold limits while making business registration equally important for the same. Suppose you choose a private limited company as your business form. In that case, you should register your business as a private limited company according to the companies act which is incorporated under the ministry of corporate affairs.

Last year was devastated by the effects of unending pandemic across the world. All the countries worldwide were under the grip of national lockdowns, travel restriction, halt in the educational process, and business getting affected the most. Nonetheless, many new things have emerged, such as video conferencing, online education, online seminars, and virtual meetings to cope with the COVID-19. This year even we have witnessed how NGOs (non-profit organizations) such as trust society under section 8 company all for philanthropic, religious purpose played a crucial role in the pandemic period. Such kind of role was essential from someone.


All the trust (regardless of their gross receipts) registered under 12 AA were claiming fifteen per cent exemption and collecting amount for five years by submitting form 10 in a manner as may be stated in the provision. This primarily consists of religious places, hospitals, CPE study circle and organizations that carry out professional programs. Same goes with educational institutions, namely school and colleges registered under 10(23C). These even consists of 3 regulators, namely ICSI, ICAI, and ICMA. The government have even seen many trusts that are fifty years old and henceforward do not possess an original copy but claims exemption. Consequently, the financial act of 2020 has revamped the whole process related to it. All the educational institutions registered under 12AA of 10(23C) regardless of the gross receipts are needed to obtain itself registered in a new form as may be stated by getting itself registered under 12AB. This was long overdue and supposed to be finished before the 31st of August, 2020. With the pandemic effects, the government has brought up taxation ordinance act, 2020 (concerning the pandemic) that the same can be obeyed before 31st of March, 2021. This amendment would carry the remission to evaluations and chartered accountants (CA) who provide services to such firms.

Consequently, all the deets such as present-day trust registration, audited financials, FCRA (foreign contribution details, 80G eligibility, trustees’ details and all the details mentioned above have to be submitted. Afterwards, it would be authorized by the commissioner of income tax in prescribed time and manner as might be stated in the provision. If you do not do so within the stipulated time, then reasonable chance would be given, or otherwise, the cancellation would occur.  

Vital concept

The term charitable activities as it has been explained under the act has a term named advancement of object of general public utility. Under the said term, 20% can only be commercial activities receipts . If it goes beyond that, then it would be taxed. But if we assess all the sports organizations, they are registered as a society under section 8 of companies act without 12AA registration or 10(23C). 

With the effect of mutuality, their income is exempted. But this has been the cause of the commotion, but the tax authority has not accepted it. Many cases are pending specifically in ITAT, Supreme court, and High court. Here, Delhi high court has ruled that interest on fixed deposit of club gets exempted due to doctrine of mutuality, nonetheless Bangalore high court overruled that decision of Delhi high court. This creates the dispute, and all the classes of organizations can choose for ‘Vivad se Vishwas’ scheme where only the disputed amount is to be resolved. Nonetheless, the financial act of 2021, which can clarify what should be included in the act. Here one can look at the Vodafone case, which led to the amendment of section 9 that enhanced business connection with economical presence.


This is the most vital component of deduction. Deduction deals concerning donation given to trusts are eligible for 100% or 50% exemption. No deduction can be permitted if it goes beyond Rs. 2000 made in cash. All trusts are obliged to submit a statement concerning donation received at the end of the year. Same goes with organizations under section 35 of the income tax that is needed to submit as well. Until and unless the same has obeyed with the assesses would not get a deduction. New section 234 G has been imposed. If the statement of donation or firms under section 35 does not submit a statement, then a fee of Rs. 200 is payable every day till the non-compliance persists.


FCRA, 2010 is a crucial component of trust society under section 8 of the companies act. All the organizations are obliged to renew by form 12AB until the same has obeyed or else FCRA registration would get struck.

The role of trust was necessary for the time of pandemic and would be an essential part of the economic system. More non-profit organizations (NPOs) would comprise a crucial part of the economy.