Learn the process of approval or rejection of applications under section 10(23C) as well as cancellation of registration u/s 10(23).

Section 10 (23C)

Under Section 10 (23C), income of certain institutions engaged in Charitable work as defined under the Income Tax Act, 1961 such as Universities, hospitals, educational institutions, and selected funds, is excluded from the levy of Income tax. About 18 activities have been classified as charitable activities. The government-financed institutions, educational institutions operating solely with the support of annual receipts of charity and trusts are also considered under this act and get an exemption from the payment of income tax.

Approval/Rejection of Applications under the Section 10 (23C)

The process of Approval/Rejection of applications is primarily covered under Section 10 (23C) (iv), (v), (vi) and (via), which also deals with the Cancellation of registration already obtained. The process of approval/rejection as per the I.T. Act of 1961 is comparatively similar to the registration/cancellation procedure of the application, which is considered under the section 12AA and 80G (5).

The only point of distinction that has been apparent between both the procedures is the checklist that needs to be provided under the section 12AA and 80G (5) on the basis of which a questionnaire has to be generated. Instruction 1 of the ITBA/Exemption (09.07.2016) explains the entire process of registration/approval. However, the applications of Section 10 (23C) is executed by using ASK/DAK. The form-s 56 as well as 56D are to be filled by the applicant for obtaining the approval of the application under Section 10 (23C).

The effective initiation of the approval procedure leads to creation of pendency for managing the workflow in an accurate manner. Several aspects that need to be focused upon for properly creating the pendency are digitizing the forms numbered 56 along with 56D, thereby generating and recording all the details of hearing notice and generating the orders among the most important individuals.

Cancellation of Application Approval under the Section 10(23C)

A tax exemption that a particular institution receives might be cancelled if the assesse fails to comply with the provisions of the Act governing the grant of such registration. The cancellation of the registration can only be done after granting due opportunity to the assesse  with proper justification and recommendation for the same as per the rules of the Section 10(23C). The only condition for cancelling of the approval to take place is that the approval must properly be registered using the option of ‘Manual to System’ or the online platform. After this, the application gets integrated with the ASK/DAK for further processing.