The Commissioner of Income Tax (Exemptions), Chandigarh, has granted registration under Section 12AB(1)(b) of the Income Tax Act, 1961 to a religious institution, recognizing it as a “Religious Entity” for income tax purposes. The registration has been made effective from 20 July 2026 and will remain valid for the Assessment Years 2026-27 to 2035-36, subject to compliance with statutory conditions prescribed under the Act. 

The registration has been granted through Form No. 10AD, issued by the CIT (Exemptions), Chandigarh, after examining the application and the material available on record. The order specifically records that the application has been approved under Section 12AB(1)(b) and that there are no grounds for rejection or cancellation in the present case. 

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Registration Does Not Automatically Confer Tax Exemption

While granting registration, the Commissioner has clarified that registration under Section 12AB does not, by itself, guarantee exemption from income tax. The order expressly states that the taxability of the institution’s income will continue to be examined independently under the provisions of the Income Tax Act.

The exemption under Sections 11 and 12 would be available only if the Assessing Officer is satisfied each year that the institution’s activities are genuine, carried out in accordance with its stated objects, and comply with all statutory provisions, including the definition of “charitable purpose” under Section 2(15), wherever applicable. 

Registration Valid for Ten Assessment Years

The approval grants registration for a period covering Assessment Years 2026-27 to 2035-36, reflecting the current framework under Section 12AB, which provides registration for a fixed tenure subject to renewal and continued compliance.

The order also warns that the registration may be withdrawn if it is subsequently discovered that:

• the institution’s activities are not genuine;
• its activities are not carried out in accordance with the conditions of registration;
• the registration was obtained through fraud or misrepresentation; or
• any condition prescribed under the Income Tax Act is violated. 

Stringent Conditions Attached to Registration

The annexure accompanying the registration order imposes several compliance obligations on the religious institution.

One of the key conditions requires that no amendment to the trust deed, memorandum, or governing rules can be made without first obtaining the approval of the Commissioner of Income Tax. Any proposed amendment must be submitted along with the draft amended deed before implementation. 

The institution has also been directed that, in the event of dissolution, its surplus assets must be transferred only to another organization having similar objects, and no part of the assets can directly or indirectly benefit any person covered under Section 13(3) of the Income Tax Act. 

Liability Under Exit Tax Provisions

The order further reminds the institution that if it is converted into another form, merged with another entity, or dissolved, it may become liable to pay tax on accreted income under Sections 115TD to 115TF of the Income Tax Act unless fresh registration under Section 12AB is granted for the relevant previous year. 

No Automatic Benefit to Donors Under Section 80G

An important clarification in the order is that registration under Section 12AB does not automatically entitle donors to claim deduction under Section 80G. Any such benefit requires a separate approval under the provisions governing Section 80G registrations. 

Annual Compliance Obligations

The institution has been directed to maintain regular books of account, have its accounts audited wherever required under Section 12A, file its income tax return within the prescribed due dates, and maintain separate books for any incidental business activities in accordance with Section 11(4A).

Additionally, separate accounts are required for different activities undertaken by the institution, and public notices regarding its activities and intended beneficiaries must be displayed at its registered office. 

Restrictions on Transfer of Office and Assets

The registration conditions also prohibit the institution from transferring its registered office outside the jurisdiction of the Commissioner without prior approval. Likewise, no assets of the trust or institution may be transferred without informing the jurisdictional Commissioner of Income Tax.

The certificate also cannot be relied upon as a basis for claiming exemption from deduction of tax at source (TDS) in relation to investments or similar transactions. 

Registration Can Be Cancelled for Future Violations

The order concludes by making it clear that if any specified violation is detected after grant of registration, the Commissioner of Income Tax (Exemptions) retains the authority to cancel the registration, provided the institution is first afforded a reasonable opportunity of being heard in accordance with law.

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