Delay in Form 10A Filing – Big Relief for Trusts! CBDT Clarifies Power to Condon Delay under Section 12A
Registration under section 12A is the lifeline for charitable trusts and institutions claiming exemption under sections 11 and 12 of the Income-tax Act, 1961. However, many trusts have faced serious difficulties in recent years due to delay in filing Form No. 10A, which is required for registration or re-registration. Even a small delay sometimes resulted in denial of exemption, leading to heavy tax demands.
In order to remove this hardship, the tax authorities have now issued an important clarification regarding the power to condone delay in filing Form 10A. This clarification may provide major relief to many trusts whose applications were delayed or rejected only on technical grounds. Let us understand the issue and the impact of the latest clarification.
Under section 12A of the Income-tax Act, a trust or institution must apply for registration within the prescribed time in order to claim exemption under sections 11 and 12. The application for registration or revalidation is required to be filed electronically in Form No. 10A.
In many cases, trusts could not file Form 10A within time due to lack of awareness, technical problems on the portal, change in law, or confusion regarding new registration provisions introduced in recent years. As a result, several applications were either rejected or kept pending, and the trusts were at risk of losing exemption.
To address this difficulty, a proviso was inserted in section 12A(1)(ac) with effect from 01-10-2024 giving power to the Principal Commissioner or Commissioner of Income-tax to condone delay in filing the application if there is a reasonable cause. The law now provides that if the authority is satisfied that there was sufficient reason for delay, the delay can be condoned and the application can be treated as filed within time.
However, even after this amendment, confusion arose regarding who actually has the power to condone the delay.
Under the present system, applications in Form 10A are processed through the centralized system, and in many cases the authority issuing registration is the Director of Income-tax (Centralized Processing Centre), Bengaluru, as per Rule 17A and related notifications. Because of this, a doubt arose whether the power to condone delay lies with the CPC authority or with the jurisdictional Principal Commissioner / Commissioner.
Due to this confusion, many trusts were not getting relief even where genuine delay existed. In some cases, the application was pending only because no authority was willing to exercise the condonation power.
To remove this uncertainty, the Board has now clarified that the jurisdictional Principal Commissioner or Commissioner of Income-tax shall have the power to condone delay in filing Form No. 10A under section 12A(1)(ac).
This clarification has been issued to ensure that genuine charitable trusts are not denied registration merely because of delay in filing the form. The circular specifically mentions that the intention is to avoid genuine hardship and to ensure that eligible trusts are not deprived of exemption due to procedural delay.
Another important point in the clarification is that the power of condonation will apply in all cases where Form 10A has been filed beyond the prescribed time limit and the application for condonation is pending or filed on or after the date of the circular.
This means that trusts whose applications are already pending can also seek relief, and the benefit is not restricted only to future cases. This part of the clarification is particularly important because many trusts have been waiting for months for a decision on delayed applications.
The clarification also reflects a practical approach by the tax administration. In recent years, the law relating to registration of trusts has undergone multiple changes, including compulsory re-registration, time-bound applications, new forms, and faceless processing. Because of frequent amendments, many genuine trusts found it difficult to comply within the prescribed time.
Courts have also repeatedly held that procedural requirements should not defeat substantive exemption where the charitable nature of the trust is not in doubt. The latest clarification appears to be in line with this principle, as it allows the authority to consider reasonable cause and grant relief where justified.
However, trusts should not assume that delay will be condoned automatically. The power to condone delay is discretionary, and the trust must show proper reasons for late filing. Therefore, whenever Form 10A is filed late, it is advisable to submit a detailed condonation request explaining the circumstances, along with supporting documents if required.
Trusts should also ensure that all other conditions of section 12A and section 12AB are properly complied with, because condonation of delay only cures the time defect and does not guarantee registration if other requirements are not satisfied.
Overall, this clarification is a welcome step and will help many genuine trusts who were facing difficulty due to technical delay in filing Form 10A. It also shows that the tax administration is willing to relax procedural rigidity where hardship is genuine.
For charitable institutions, the message is clear – compliance should always be done on time, but if delay has already occurred, the law now provides a remedy. Proper application before the jurisdictional Commissioner may save exemption and avoid unnecessary tax liability.
The copy of the Circular is as under:
