Provisional registration

An NPO cannot get permanent tax-exempt status the day it registers. It first gets a trial period. The workbook calls this provisional registration.

Provisional registration is granted under Section 12AB of the Income Tax Act, 1961. It is valid for a maximum of 3 years. After that, if the NPO wants to continue, it must apply again — and this time, if approved, the registration runs for a longer period: 5 years.

This two-stage design applies to every NPO seeking tax exemption, whether brand new or previously registered under the older Section 12AA. The workbook notes that all charitable institutions previously registered under 12AA, as well as every new entity, must apply afresh under 12AB — though the underlying registration procedure and scope of verification stay much the same.

The two-stage registration cycle under Section 12AB, per the workbook (Chapter 10, section 10.3):

Provisional registration is not the end of an NPO's obligations — once granted, the NPO must, among other duties:

1. Maintain proper books of accounts and other prescribed documents
2. File its income tax return on time, with accounts audited by a Chartered Accountant
3. Strictly follow the conditions attached to its registration
4. Furnish details under Rule 18AB of the Income Tax Rules for each financial year
5. Issue donors a certificate in Form 10BE

This registration is separate from, but linked to, an NPO's SEBI registration on the SSE: Table 3.1's mandatory NPO registration criteria require a valid income-tax exemption certificate under 12A/12AA/12AB, current for at least the next 12 months.

Illustrative NPO; the 3-year and 5-year periods are the workbook's own rule.

Nav Kiran Trust, newly formed, applies for tax exemption and is granted provisional registration under Section 12AB, valid for 3 years, from April 2024 to March 2027.

During those 3 years, it maintains its books, files returns on time, gets its accounts audited, furnishes Rule 18AB details annually, and issues Form 10BE certificates to its donors. In early 2027, before the provisional period expires, it applies for its subsequent registration, which — once approved — runs for 5 years, to March 2032.

Had Nav Kiran Trust let its provisional 3-year window lapse without applying for subsequent registration, it would risk losing its tax-exempt status, and its ability to satisfy the SSE's own 12-month-validity registration criterion.

Chapter 10 (Taxation), section 10.3, sets out provisional registration under Section 12AB, its 3-year duration, and the 5-year subsequent registration that follows. Chapter 3's Table 3.1 links a valid 12A/12AA/12AB certificate to SSE registration eligibility. Expect a question asking the maximum duration of provisional registration or of subsequent registration.

• Provisional registration runs for a maximum of 3 years; subsequent registration runs for 5 years. Do not swap the two durations.
• Both new and previously-12AA-registered entities must apply afresh under 12AB.
• Provisional registration comes with ongoing compliance duties (books, returns, audit, Rule 18AB, Form 10BE) — not a one-time approval with nothing further required.
• Do not confuse provisional registration under 12AB (income-tax exemption) with the separate 80G registration that lets an NPO extend a tax deduction to its own donors.