Extension of registration for smaller charitable institutions
• As per existing regulations, charitable institutions registered under old regime (section 12A) were granted registration under new regime (section 12AB) for a period of five years. Further at the expiry of such period, the institutions were required to reapply post which registration would be extended for another five-year period.
• It has been proposed that charitable institutions whose total income (without giving effect to section 11 and 12) is less than INR 5 crores, in each of the preceding two years in which application is made, shall be granted registration for a period of 10 years instead of 5 years
• The above amendment will be applicable from 1 April 2025
Rationalisation of ‘specified violation’
• Section 12AB(4) provides that where registration or provisional registration of a charitable institution has been granted and subsequently, the Principal Commissioner/ Commissioner has noticed one or more ‘specified violations’ during any previous year, then Principal Commissioner/ Commissioner can cancel the registration of such institution if he is satisfied that one or more specified violations have taken place
• Definition of ‘specified violation’ presently includes submission of incomplete application
• It has been proposed that an incomplete application shall not be treated as ‘specified violation’
Rationalisation of ‘specified person’
• Section 13 states that any income of a charitable institution shall not be exempt if such income enures, or such income or any property of the institution is used or applied, directly or indirectly for the benefit of a person referred in sub-section (3), which includes:
any person whose total contribution during the previous year exceeds INR 50,000;
any relative of above person; or
any concern in above person has a substantial interest
• It is proposed that threshold for contribution shall be increased from INR 50,000 to INR 1,00,000 and cumulatively INR 10,00,000 per year. Relatives and substantial interest entities of such person shall also be excluded from the definition of ‘specified person’
• The above amendment will be applicable from 1 April 2025
About ThinkCap Advisors
As a social sector consulting firm & a CSR consulting firm, ThinkCap Advisors works with corporations and Non-Governmental Organizations (NGOs) at the strategic, tactical, and execution levels to ensure their social objectives are met. Whether it's advising on CSR initiatives or compliance with regulatory requirements, our social sector consulting services consultants work across the entire social spectrum framework
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