Section 12AB Renewal: A 10-Year Relief for Small Trusts, or Still a 5-Year Puzzle?
For decades, charitable and religious trusts in India have lived under the shadow of compliance calendars. Just when trustees felt they could focus on their charitable work, the law reminded them: “Your registration is about to expire, please renew.”
Section 12AB, introduced in 2021, created exactly such a cycle, requiring trusts to renew their registration every 5 years. But in 2025, the Finance Act brought a welcome change – at least on paper – extending the period to 10 years for smaller trusts. The only question is: has this really freed small trusts from renewal, or has it created a new round of confusion?
The Old Regime: Every 5 Years, Same Story
When the law was overhauled in 2021, all trusts registered under the old Section 12AA were migrated into the new regime. Registrations were generally granted up to AY 2026–27 (31 March 2026).
Section 12A required that renewal applications be filed at least six months before expiry. This meant that most trusts had to file Form 10AB by 30 September 2025 – a date that many trustees had already circled in red.
Finance Act 2025: A New Proviso, A Longer Life
To reduce compliance burden, the Finance Act, 2025 inserted a proviso in Section 12AB(1):
• Small trusts (with income not exceeding ₹5 crores, before giving effect to Sections 11 & 12) would now get registrations valid for 10 years instead of 5.
• Importantly, the law used the words “had been substituted” – suggesting that even registrations already granted for 5 years should now be read as valid for 10 years.
This intent was backed by the Budget Speech of the Finance Minister, which clearly stated: “I propose to reduce the compliance burden for small charitable trusts by increasing their period of registration from 5 years to 10 years.”
Where Confusion Creeps In
Despite this clear legislative intent, the practical ground reality looks different:
• Certificates already issued still mention validity only up to AY 2026–27.
• No fresh certificates or clarifications have been issued by CBDT to confirm that these can be treated as 10-year approvals.
• Trustees are left wondering whether to rely on the Finance Act’s wording or to stick to the old compliance cycle.
The Final View
1. Conservative Approach
File Form 10AB by 30 September 2025 anyway. This avoids the risk of cancellation or disputes, especially since the law still requires a renewal application six months before expiry. The Finance Act’s 2024 amendment applies prospectively only on new registration granted.
2. For Larger Trusts (> ₹5 crores income)
No relaxation applies. Renewal must be filed before 30 September 2025.
3. For 80G Registration
No change – validity remains 5 years, so renewal is compulsory.
The Larger Takeaway
The government’s move to extend validity is a progressive step, reducing unnecessary paperwork for smaller charitable institutions. Yet, the lack of administrative clarity has turned what should have been a relief into a riddle.
Small trusts that wanted to celebrate a 10-year holiday from renewal are instead left asking: “Do we still need to file Form 10AB?” Until CBDT clarifies, most advisors recommend caution – file the renewal and sleep peacefully.
Because in tax compliance, one rule always holds true: it’s better to file and forget, than forget and regret.
