[Opinion] Key Steps to Avoid Rejection of Application Under Section 12A and 80G

Chunauti H. Dholakia – [2025] 170 taxmann.com 620 (Article)

There are many issues related to registration of charitable and religious trusts under section 12A and 80G of the Income tax Act. Due to some of the issues, the application for registration has been rejected. In many cases application for regular registration is rejected with cancelling the provisional registration also. Rejection of application for registration may result in many consequences. Some key steps may help in ensuring compliance related to provisions applicable to registration and through which rejection of application for registration of trusts can be avoided. Such key steps are discussed hereunder.

Proper selection of name of the trust

At the time of formation of trust, name of the trust is decided by trustees of the trust. But name of the trust may become reason for rejection of application for registration of trust under section 12A and 80G. If name of the trust contains reference of particular religious community, application for registration under section 12A will be rejected by invoking section 12AB(4). As provided under section 12AB(4), if the trust is established after commencement of this Act and has applied any part of income for the benefit of particular religious community or caste, it is treated as “specified violation” and application for registration under section 12A will be rejected/cancelled. Some of the judicial pronouncements such as Sindu Seva Samiti v. CIT (Exemption), Ahmedabad, ITA No. 265/SRT/2023 (ITAT Ahmedabad), Jamiatul Bannat Tankaria, Bharuch v. CIT (Exemption) [2024] 160 taxmann.com 358 (ITAT Ahmedabad), Bhojalram Leuva Patel Seva Samaj Trust v. Commissioner of Income Tax (Exemption), ITA No. 667 & 668/Ahd/2023 (ITAT Ahmedabad) etc. directs that “actual activity of the trust should be verified for registration and not any word in the name of the trust indicating any particular religious community.” It also directs that “only due to inclusion of word related to any particular religious community in the name of the trust, it cannot be confined that the trust is formed for the benefit of particular religious community.” However, to avoid litigation, it is better to avoid reference of any particular religious community or caste in the name of the trust.

Also, name of the trust should be consistent with the objects of the trust. If there will be mismatch in name and objects of the trust, it may become reason for rejection of application. Hence name of the trust should not include any word, which does not conforms to the objects of the trust.

Also, sometimes application for registration is rejected due to mismatch in name of the trust with PAN. Hence at the time of filing application for registration, it should be ensured that name as per trust deed and as per PAN are same.

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