Indore (Madhya Pradesh): Renewal of income tax exemption to charitable institutions will henceforth not be easy. It will only be done following scrutiny of the list of the donors and activities by the income tax commissioner (exemption) . All such institutions will have to file the application for the renewal of exemption by September 30.
Income tax experts gave this information in a workshop organized jointly by the Tax Practitioners Association (TPA) and the Indore CA branch here on Friday. Discussions were held in detail on the provisions of continuing the income tax exemption for charitable organizations.
The keynote speakers were senior CA Rakesh Mittal and CA Bhagwan Agarwal. TPA president CA JP Saraf explained that changes in income tax provisions for charitable institutions were made effective in 2021, making it mandatory for charitable organizations to renew their income tax exemptions duration every five years.
In 2021, organizations that previously held exemptions were renewed for the next five years without any inquiry. All such organizations had to submit a renewal application Form 10 AB before September 30 to continue this exemption.
CA Rakesh Mittal said that this renewal would only be granted after thorough investigation. All charitable organizations would face such scrutiny for the first time and would be required to provide detailed information about their activities, assets, income, expenses and office bearers. CA Mittal explained the precautions to be taken when filling out this form.
CA Bhagwan Agarwal provided step-by-step information on how to fill Form 10AB. He said that all religious, educational and charitable organizations registered under Section 12A/80G/10(23C)(vi) of the Income Tax Act and those registered under the new law for five years, until AY 2026-27, must apply for re-registration in Form 10AB before September 30.
The registration would not be granted automatically but only after the income tax commissioner (exemptions) conducted a detailed inquiry, including activities, list of donations, purpose, payments to related parties and verification of immovable properties.
The trusts and institutions that did not apply on time and remained unregistered would be required to pay tax on the market value of their total assets. A large number of chartered accountants and tax consultants were present in the workshop.
