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Question ID : 44476

Query regarding final registration of a new NGO under section 12AB of the Income Tax Act and the dat

Hello fellow CAs, I am CA Vamsi Krishna Ryali (Membership No 255279) from Dwarapudi of Andhra Pradesh. and I have a query regarding the final registration of a new NGO under section 12AB of the Income Tax Act. My client is a new NGO that was incorporated on 23-Jun-2021. I applied for provisional registration under 12AB and it was approved on 31-Dec-2021. As per the provisions of the Income Tax Act, we must apply for final registration within six months of commencement of activities or before expiry of provisional registration whichever is earlier. However, we did not apply for final registration within six months because our client did not have many activities or donations till date. I would like to know the following: 1. How is the date of commencement of activities determined for the purpose of final registration under 12AB ? 2. Is this date subjective or objective ? 3. Is this date the same as the date of issue of provisional registration or different ? 4. Can this date be decided by the management of the NGO or is it fixed by law ? I request any clarification or guidance from the experts in this forum. Thank you in advance.

Posted by RYALI VAMSI KRISHNA on May 05, 2023

Filed Under Profits & Gains of Business & Profession

Answer ID : 83997

Date of commencement of activity is not defined under the Act. But it should be the date when first donation was obtained or when first time expenses on charitable object was incurred. It is different from date of provisional registration, as this registration can be obtained before commencement of activity. It is not fixed by law. But it is generally considered that any activity cannot be started without receiving income or incurring expenditure. Hence the date when the trust started to receive donation or started to incur expense is considered as date of commencement of activity.

Posted by CA. chunauti dholakia on May 05, 2023