(1) A registered non-profit organisation or a person referred to in Schedule III (Table: Sl. No. 1) may, for the purpose of section 133(1)(b)(ii), make an application for approval in such form and manner, as prescribed, to the Principal
Commissioner or Commissioner, subject to the following conditions:––
(a) it is not expressed to be for the benefit of any particular religious community or caste;
(b) it is established in India for a charitable purpose and does not incur any expenditure of an amount being 5% or more of its total income during a tax year which is of a religious nature;
(c) the instrument under which it is constituted does not, or the rules governing it do not, contain any provision for the transfer at any time of the whole or any part of its assets for any purpose other than a charitable purpose;
(d) it maintains regular accounts of its receipts and expenditure;
(e) it prepares such statement for such period, as prescribed, and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time, as prescribed;
(f) it delivers to the said prescribed authority, a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under clause (e) in such form and verified in such manner, as prescribed; and
(g) it furnishes a certificate to the donor specifying the amount of donation within such period from the date of receipt of the donation containing the requisite particulars in the manner, as prescribed.(2) The application under sub-section (1) shall be made in respect of the cases referred to in column B of the Table below within the time limit provided in column C of the said Table and the Principal Commissioner or Commissioner, on receipt of such application, shall follow the procedure provided in sub-sections (3) and (4),
and shall pass an order in writing within the time limit provided in column D and approval, if granted, shall be valid for a period provided in column E of the said
Table.
| Sl. No. | Case | Time limit for furnishing application | Time limit for passing the order | Validity of approval |
| 1 | Where the activities of the applicant have not commenced | At any time during the tax year from which approval is sought | One month from the end of the month in which the application is made | Three tax years commencing from the tax year in which such application is made |
| 2 | Where the activities of the applicant have commenced | At any time during the tax year from which approval is sought | Six months from the end of the quarter in which the application is made | Five tax years commencing from the tax year in which such application is made |
| 3 | Where the applicant has provisional approval and activities have commenced | Within six months of the commencement of activities | Six months from the end of the quarter in which the application is made | Five tax years commencing from the tax year in which such application is made |
| 4 | Where the provisional approval of the applicant is due to expire and activities have not commenced | At least six months prior to the expiry of the provisional approval | Six months from the end of the quarter in which the application is made | Five tax years following the tax year in which such application is made |
| 5 | Where the period for approval of a registered non-profit organization is due to expire | At least six months prior to the expiry of the said approval | Six months from the end of the quarter in which the application is made | Five tax years following the tax year in which such application is made |
(3) Where an application has been made in any of the cases specified under sub-section (2) (Table: Sl. No. 2) to (Table: Sl. No. 5), the Principal Commissioner or Commissioner shall call for such documents or information or make such inquiries as he thinks necessary in order to satisfy himself as to the compliance of such requirements of any other law in force, as are material for the purpose of
achieving its objects, and the genuineness of activities and––
(a) if he is so satisfied about the objects and the genuineness of the activities and compliance of the requirements of any other law in force, he shall pass an order in writing approving it; or
(b) if he is not so satisfied, after affording a reasonable opportunity of being heard,––
(i) shall pass an order in writing rejecting the application, where the application was made in any of the cases specified in
sub-section (2) (Table: Sl. No. 2); and
(ii) in any other case, shall pass an order rejecting the application and also cancelling the approval, and send a copy of the order to the applicant and the Assessing Officer.
(4) Where an application has been made in any of the cases specified in sub-section (2) (Table: Sl. No. 1), the Principal Commissioner or Commissioner shall pass an order granting provisional approval.