Trust and NGO Compliance in Gujarat: Charity Commissioner, Income Tax and FCRA
A charitable trust in Gujarat answers to three separate authorities, each with its own filings and dates. The Charity Commissioner wants audited accounts and change reports. The income-tax department wants registration renewals and an audit report. If you receive foreign money, FCRA has its own regime entirely. Missing any one of them can cost the exemption that makes the trust viable.
Why it matters
Exemption Is Conditional, and the Conditions Are Procedural
Trusts rarely lose exemption because of what they do. They lose it because a form was filed late or not at all.
The audit report comes before the return
The report must be filed before the return. File it late and the exemption for that year can be denied outright.
Registration now expires
Income-tax registration runs for five years and must be renewed. Letting it lapse means the trust is taxed as an ordinary entity.
Trustee changes must be reported
A change report to the Charity Commissioner within 90 days keeps the public record accurate, which matters when banks ask who can sign.
FCRA is unforgiving
Foreign contribution received into the wrong account, or an annual return missed, can lead to suspension or cancellation of registration.
Three authorities, three calendars
| Authority | What it governs | Main annual filing |
|---|---|---|
| Charity Commissioner, Gujarat | Registration and administration of public trusts in the state | Audited accounts in the prescribed schedules, and the annual budget |
| Income-tax department | Exemption under Sections 11 and 12, and 80G for donors | Audit report in Form 10B or 10BB, followed by ITR-7 |
| Ministry of Home Affairs, under FCRA | Receipt and use of foreign contribution | Annual return in Form FC-4 |
A society registered under the Societies Registration Act, or a Section 8 company, has a different first column, but the income-tax and FCRA obligations are the same. Societies in Gujarat that are also public trusts register with the Charity Commissioner as well.
Charity Commissioner filings
- Annual accounts. Accounts must be audited by a Chartered Accountant and filed with the Charity Commissioner in the prescribed schedules, showing income, expenditure and the balance sheet.
- Budget. Trusts above the prescribed income level file an annual budget in advance of the year.
- Change report. Any change in trustees, in the trust property, or in the trust's particulars must be reported within 90 days of the change. This is the filing most often overlooked, and an unreported trustee change creates real problems when the trust next has to deal with a bank or a registrar.
- Contribution to the Public Trust Administration Fund. A percentage of gross annual income is payable to the fund, along with the accounts.
- Prior permission for property dealings. Sale, mortgage, exchange or long lease of trust property requires the Charity Commissioner's sanction. A transaction done without it can be challenged.
Income-tax registration and audit
Exemption depends on a valid registration under Section 12AB, and donors' deduction depends on a valid 80G approval. Both now run for fixed periods rather than in perpetuity.
Registration under Section 12AB
Granted for five years and renewed on application before it expires. A newly formed trust receives provisional registration first, and applies for regular registration within the prescribed period after starting activities.
Approval under Section 80G
Separate from 12AB, and also for a fixed period. Without it, donors get no deduction, which usually affects fundraising immediately.
Statement of donations
Trusts with 80G approval file a statement of donations received and issue certificates to donors. A donor's deduction now depends on the trust reporting the donation, so errors here directly affect your supporters.
Audit report
Form 10B applies where income exceeds the prescribed threshold, or where the trust has foreign contribution or applies income outside India. Other trusts file Form 10BB. The report must be filed before the return.
Return in ITR-7
Due by 31 October where accounts are audited. The audit report must already be on record.
Because 12AB and 80G run in five-year cycles, the renewal falls due long after anyone has thought about it. Put both expiry dates in the trust's calendar the day the certificate is received, and check them at every annual meeting.
The 85% application rule
To keep its exemption, a trust must apply at least 85% of its income towards its charitable objects during the year. Two routes exist where it cannot:
Deemed application
Where income could not be applied because it was not received during the year, or for another specified reason, it can be treated as applied by exercising the option in the prescribed form before the return is filed.
Accumulation
Income can be accumulated for a specific purpose for up to five years by filing the prescribed form and investing the amount in the modes permitted under Section 11(5).
Both options depend on filing a form on time. Miss it, and the unapplied income is simply taxable. Note also that only revenue application and capital expenditure on the objects count; investments in modes outside Section 11(5) do not, and corpus donations have their own treatment.
FCRA, if you receive foreign funds
- Registration or prior permission from the Ministry of Home Affairs is required before receiving any foreign contribution. Prior permission covers a specific donor and purpose; registration is general and renewable.
- The designated account. Foreign contribution must first be received in an FCRA designated account at the specified branch of the State Bank of India in New Delhi, and may then be moved to a utilisation account.
- No transfer to other organisations. Foreign contribution cannot be passed on to another person or organisation, even one that is itself FCRA registered.
- Administrative expenses are capped at the prescribed percentage of the foreign contribution received in a year.
- Annual return in Form FC-4, with audited accounts of foreign contribution, filed online within the prescribed period after the financial year.
- Keep FCRA funds entirely separate from domestic funds, in the accounts and in the books.
Records to maintain through the year
- Trust deed with all amendments, and the registration certificate from the Charity Commissioner
- 12AB and 80G certificates, with their expiry dates noted
- Minutes of trustee meetings, with attendance
- Donation register, with donor details, and receipts issued in serial order
- Separate ledgers for corpus donations, general donations and any foreign contribution
- Records of activities carried out: photographs, beneficiary lists, reports, so that application of income can be demonstrated and not merely asserted
- Investment records showing that funds are held only in the modes permitted under Section 11(5)
- Registration on the NGO Darpan portal, and Form CSR-1 with the MCA if you intend to receive CSR funding
This guide is general information on Indian tax and corporate law as it stood on 11 September 2026, and is not advice for any particular case. Rules, due dates and forms change, and how they apply depends on your facts. Please confirm the current position before acting, or speak to a qualified professional.
Who this applies to
Organisations This Covers
Different structures, largely the same obligations.
Religious and community trusts
Temple trusts, community halls and endowments registered with the Charity Commissioner, often with property that needs sanction before any dealing.
Educational and medical institutions
Schools, hostels and clinics run on trust, where exemption depends on the activity remaining charitable in substance.
NGOs receiving foreign funds
FCRA registration, the designated SBI account and the annual return apply in addition to everything else.
Section 8 companies
ROC filings under the Companies Act replace Charity Commissioner filings, but income-tax registration and audit requirements are the same.
Frequently asked questions
Answers to Your Trust Compliance Questions
What does a charitable trust in Gujarat have to file every year?
Audited accounts and the budget with the Charity Commissioner, together with the contribution to the Public Trust Administration Fund; the audit report in Form 10B or 10BB followed by the return in ITR-7 with the income-tax department; and Form FC-4 with the Ministry of Home Affairs if the trust receives foreign contribution.
Does income-tax registration for a trust expire?
Yes. Registration under Section 12AB is granted for five years and must be renewed before it expires, and 80G approval runs in its own fixed cycle. If registration lapses, the trust loses exemption and is taxed as an ordinary entity, so note both expiry dates when the certificates are issued.
What is the 85% rule?
A trust must apply at least 85% of its income to its charitable objects during the year. Where it cannot, it may treat income as applied by exercising the deemed application option, or accumulate it for a specific purpose for up to five years. Both require a form to be filed before the return, and missing the form makes the unapplied income taxable.
When does a trust need an audit?
Where total income before exemption exceeds the basic exemption limit, the accounts must be audited by a Chartered Accountant and the report filed in Form 10B or 10BB before the return. Form 10B applies to larger trusts and to those with foreign contribution or income applied outside India. The Gujarat Public Trusts Act requires an audit separately.
Do I have to report a change of trustees?
Yes, to the Charity Commissioner within 90 days of the change. This is frequently overlooked and causes problems later, because banks and registrars rely on the public record to establish who is authorised to act for the trust.
Can we receive foreign donations without FCRA registration?
No. Foreign contribution requires FCRA registration or prior permission from the Ministry of Home Affairs before any money is received, and it must come into the designated account at the specified State Bank of India branch in New Delhi. Foreign contribution also cannot be transferred to another organisation.
Running a Trust or NGO? Let's Check Where You Stand.
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C M Patel & Company, Chartered Accountants
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