Last reviewed: 25 September 2026. Exemption approvals are evidence exercises: the authority reads your constitution, your activities and your books, and asks whether they agree with each other and with the law. Rejections cluster where they disagree. The regime basics live in the 12A/80G guide; this is the failure-and-fix layer.
- Registration: section 332 of the Income-tax Act, 2025 (old 12A/12AB); switching between regimes: section 333
- Approval for donor deduction: section 354 (old 80G(5)); the donor's deduction itself: section 133 (old 80G)
- Tax on accreted income: section 352 (old 115TD)
- Existing registrations and approvals continue as if granted under the new Act: section 536(2)(j)
- The Income-tax Rules, 2026 renumber the forms, so confirm the current number of the Form 10AB application on the e-filing portal before you file
Applications made and orders passed up to 31 March 2026 remain governed by the 1961 Act sections cited below.
The rejection map
| Ground | What the authority saw | Rebuild |
|---|---|---|
| Objects not charitable / too wide | Trade-like or catch-all object clauses | Amend the deed/MoA to clean charitable objects BEFORE reapplying; drift is constitutional, not cosmetic |
| Activity evidence thin | New/paper entities with no demonstrable work | Document real activity: photos, beneficiary lists, expenditure trails — or apply provisionally where the route fits |
| Books and objects disagree | Spending outside objects; heavy “other” expenses; cash opacity | Clean utilisation records; align spending narrative with objects; explain outliers upfront |
| Registration mismatches | Names/addresses/PAN differing across deed, PAN, portal | Reconcile every identity document first — mismatches read as carelessness at best |
| Query non-response | Notices unanswered inside windows | The commonest killer: calendar the proceedings and answer point-wise, every time |
| Late application | Regular registration sought after the window following provisional registration | Check whether a CBDT condonation window applies before refiling |
| Genuineness doubts | Related-party benefits, fee-heavy models, private-benefit optics | Address head-on with structure changes or candid explanations — silence confirms suspicion |
Time limits that decide the route
| Step | Time limit under the 1961 Act |
|---|---|
| Regular registration after provisional registration | At least six months before the provisional registration expires, or within six months of starting activities, whichever is earlier (section 12A(1)(ac)(vi)) |
| Renewal of regular registration | At least six months before expiry (section 12A(1)(ac)(ii)) |
| Appeal against rejection | To the Income Tax Appellate Tribunal under section 253(1)(c), within two months of the order being communicated |
Missed dates are sometimes cured by CBDT extensions; see our note on the 2026 Form 10AB condonation circular. For applications made from 1 April 2026, read the corresponding limits in section 332 before refiling.
What a rejection can cost: a worked example
A Thane education trust receives Rs 50 lakh of donations in a year and spends Rs 44 lakh on its objects. The figures below are illustrative for tax year 2026-27.
| Line | Registration granted | Registration refused |
|---|---|---|
| Donations received | Rs 50,00,000 | Rs 50,00,000, taxable as income |
| Applied to objects | Rs 44,00,000 (88%, above the 85% requirement) | Charitable spending is generally not a deductible business expense |
| Taxable income | Nil; the Rs 6 lakh surplus is within the 15% that may be kept | Up to Rs 50,00,000 if no expenditure is allowed |
| Tax | Nil | About Rs 11.23 lakh at new-regime slab rates plus cess, and more where the maximum marginal rate applies |
| Exit-tax risk | None | Possible tax on accreted income under section 115TD (section 352 from tax year 2026-27) if the trigger conditions are met |
The actual figure depends on how the trust is assessed, but the gap is large enough that a rejection should be answered quickly.
Rebuilding for the refile
- Fix the constitution first where objects were the ground — refiling on unamended documents rewinds the same movie
- Build the activity dossier: one page per programme with proof
- Reconcile identities across PAN/deed/portal before touching Form 10AB
- Answer the last proceeding’s doubts in the new application proactively
- Decide appeal or refile within the two-month appeal window, not after it
Foreign-funded NGOs should keep the FCRA record in step: the activity and utilisation evidence that supports 12A/80G is the same evidence FCRA returns rely on. Our FCRA registration guide covers that side.
Frequently asked questions
Provisional approval was easy — why is regularisation hard?
Provisional grants ride on paper; regularisation examines conduct. The gap between what you filed and what you did is exactly what the second stage tests.
When must we apply for regular registration after provisional registration?
Under section 12A(1)(ac)(vi) of the 1961 Act, the Form 10AB application is due at least six months before the provisional registration expires, or within six months of starting activities, whichever is earlier. Missing that window is itself a rejection risk. Applications made from 1 April 2026 fall under section 332 of the Income-tax Act, 2025, so read the time limits in that section before refiling.
Can we operate and take donations after rejection?
You can receive, but donor 80G benefits and your exemption are the casualties — rebuild fast, because every intervening year is taxed-and-awkward.
Can a rejection trigger exit tax?
Yes, in some cases. Section 115TD of the 1961 Act taxes accreted income, broadly the fair market value of assets less liabilities, at the maximum marginal rate when registration is cancelled or when a trust that modified its objects has its fresh application rejected. The 2025 Act carries this into section 352, whose triggers also include failure to obtain renewal. Take advice on exposure before deciding between appeal and refiling.
Our objects include one commercial-sounding line. Fatal?
Often curable by amendment; incidental-activity framing has limits. Amend cleanly rather than argue eloquently for a bad clause.
How much activity evidence is “enough”?
Enough that a stranger believes the programmes happened: dated photos, lists, vouchers, partner letters. Volume matters less than verifiability.
The rejection cited non-response but we never saw notices. Remedy?
Portal-served notices count as served — appeal/refile while fixing the real lesson: a monitored login and a proceedings calendar.
Does rejection of 80G affect 12A (or vice versa)?
They are distinct approvals with shared facts — one’s rejection often signals the other’s risk. Rebuild the common evidence base once, for both.
Is appeal better than refiling?
Appeal suits wrong-on-facts/law rejections; refiling suits curable defects. For orders under the 1961 Act, an appeal lies to the Income Tax Appellate Tribunal under section 253(1)(c) within two months of the order being communicated. The dates, the ground, and the cure cost decide — an honest memo before either.
Can a professional promise approval?
No one can — the authority decides. Preparation aims to put a complete, documented record before the authority.
We amend constitutions where needed, build the activity dossier, and run 10AB proceedings — answering every query on calendar.
NGO ComplianceTrust/Society SetupRequest a Scope DiscussionThis article is a general educational summary as on 25 September 2026 and is not professional advice or an assurance of any approval, registration or outcome — departmental decisions rest with the authorities on each case’s facts. Requirements change; verify current rules or discuss your specific case before acting.