Income Tax

Step-by-Step Process: Apply for Section 12AB Renewal and Avoid Penalties

by TaxAcumen Team

Charitable and religious trusts must register under Section 12AB of the Income Tax Act in order to be eligible for income tax exemptions. Registrations were first granted with a limited validity, typically five years, when this option was first implemented.

In order to continue receiving tax benefits, many trusts must renew their registration before their current period comes to a completion. One significant change brought about by the Finance Act 2025 is that qualifying entities can now receive 10-year validity rather than 5-year.

Also read here

Section 12AB Registration – Meaning, Importance, and Latest Changes (2025 Update)
Eligibility and Documents Required for Section 12AB Renewal in 2025

Why Renewal is Mandatory

Prior to the expiration date, each trust or institution that has acquired Section 12AB registration must submit an application for renewal. This is a must. The trust will lose its tax exemption benefits under Sections 11 and 12 if the renewal is not completed within the allotted period.

According to the law, the application for renewal must be submitted at least six months before the expiration date. The renewal must be submitted by September 30, 2025, for registrations that expire on March 31, 2026.

Eligibility for 10-Year Validity

In substitution of the previous 5-year cycle, the Finance Act 2025 added a provision that permits some trusts to be renewed for ten years. To be eligible,

  • The total revenue of the trust, as determined without the use of Sections 11 and 12, cannot be more than ₹5 crore in each of the two years before the application year.
  • Not gross receipts, but total income is subject to this cap.

For instance, you can renew your trust for a 10-year period if its total revenue (before exemptions) was ₹4.5 crore in FY 2023–2024 and FY 2024–2025.

Step-by-Step Process for Renewal

Form 10AB must be filed on the Income Tax e-filing portal as part of the entirely online renewal process. The steps are as follows:

Step 1: Log in to the Portal

Go to the Income Tax e-filing portal and log in using the trust’s credentials.

Step 2: Select Form 10AB

Navigate to ‘e-File’ > ‘Income Tax Forms’ > ‘File Income Tax Forms’ and choose Form 10AB under the relevant section.

Step 3: Choose Correct Category

In the form, select the correct sub-clause under Section 12A(1)(ac) for renewal (usually sub-clause (ii) for standard renewal).

Step 4: Attach Documents

Upload the following documents:

  • Audited financial statements for the last two financial years
  • Computation of income showing compliance with the ₹5 crore limit
  • Trust deed and registration certificate
  • Activity report and compliance certificates

Step 5: Submit and Verify

Submit the form online and verify it using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

Timelines and Processing

The application will be processed by the Commissioner of Income Tax (Exemptions) or the Principal Commissioner after it is submitted. The order must be issued within six months of the end of the quarter in which the application is filed, according to the statute. The registration will be renewed upon verification of authentic activity and completion of all necessary documentation.

Consequences of Non-Renewal

Sections 11 and 12 exemptions will be lost if the registration is not renewed by the deadline. A significant tax burden could arise from the trust’s revenue becoming taxable. Penalties for non-compliance are another possibility.

Tips for Preventing Penalties

  • Apply as soon as possible: don’t hold off until the last minute. Apply seven to eight months prior to expiration.
  • Verify that the documents are complete: Missing paperwork may cause permission to be delayed.
  • Monitor the status of your application: Check the portal frequently for updates.

Conclusion

In order to continue receiving tax benefits, charity and religious organisations are required by law to renew their Section 12AB registration. If qualifying trusts meet the ₹5 crore income criterion, they can achieve long-term compliance with the new 10-year validity requirement. The secret to avoiding fines and preserving exemption benefits is the timely filing of Form 10AB with correct documentation.