New tax rules ease registration, cut record-keeping for charitable trusts
New Delhi, Mar 22, 2026
New Income-tax Rules, 2026 introduce a single registration form and cut record retention to six years, reducing compliance burden for charitable trusts and non-profits
Charitable trusts and non-profit organisations will get a simplified registration process and reduced record-keeping requirements under the Income-Tax Rules, 2026, notified by the Central Board of Direct Taxes (CBDT) on Friday.
This comes ahead of their April 1 rollout along with the Income-Tax Act, 2025.
The rules introduce a single common prescribed form for both registration of charitable trusts and approval for tax-deductible donations, replacing the earlier multi-step process.
Provisional registration approvals will now be handled through the Centralised Processing Centre (CPC) instead of jurisdictional tax officers. This aims to improve speed and consistency across the country.
Under the new framework, provisional registration may be treated as non-est (invalid from the very beginning) if the trust has already started activities or holds another registration.
Trusts can also voluntarily surrender such registration if no tax benefits have been claimed. If they undertake not to claim them in future, it will be treated as never granted.
The CBDT has further introduced a dedicated prescribed form for trusts seeking approval to change the purpose for which income has been accumulated.
In a key relief, the record retention period has been cut to six years from the end of the relevant tax year. This is down from the earlier requirement of 10 years from the end of the assessment year.
Under the earlier regime governed by the Income-tax Act, 1961, newly-formed trusts first applied for provisional registration in Form 10A before commencing activities.
This was processed by the jurisdictional principal commissioner of income-tax (exemptions) and remained valid for three years.
After starting operations, trusts had to apply for regular registration in Form 10AB, valid for five years, with detailed submission of audited accounts and activity reports.
The process remained decentralised, often resulting in delays and variations across jurisdictions.
There was no formal option for easy surrender of provisional registration, and changing the trust’s objects required a separate application without any dedicated form.
Sandeep Bhalla, partner with Dhruva Advisors, welcomed the changes, saying the common form and centralised processing through CPC will bring the much-needed uniformity and speed.
“The voluntary surrender option and reduced record-keeping period are particularly welcome for smaller organisations, as they cut compliance burden and paperwork significantly,” he added.
Abhishek A Rastogi, founder of Rastogi Chambers, said the new provisions mark a practical easing for the non-profit sector.
He said, “Trusts can now exit provisional registration cleanly if not used, and maintaining records for only six years will save considerable time and cost, especially for smaller non-government organisations (NGOs) and newly-established trusts.”
The CBDT has also issued frequently asked questions (FAQs) clarifying that all existing registrations and approvals granted under the 1961 Act will continue to remain valid.
Assessments, appeals and compliance obligations for financial year 2025-26 and earlier periods will proceed under the old law without disruption.
The FAQs reiterate that Section 6 of the General Clauses Act, 1897 will apply to the repeal of the Income tax Act, 1961.
This ensures that rights, benefits, obligations and liabilities that arose under the old law continue to exist, even beyond what is explicitly provided in the savings provisions of the new Act.
By applying these broader legal principles, the framework also covers unforeseen situations.
“Overall, the FAQs send a reassuring message to taxpayers that transition to the Income tax Act, 2025 is intended to be smooth and non disruptive. By preserving existing rights, ensuring continuity of proceedings, and providing practical guidance on transitional issues, the CBDT has sought to minimise uncertainty and help taxpayers navigate one of the most significant tax law reforms in recent decades,” said Richa Sawhney, partner with Grant Thornton Bharat.
[The Business Standard]
