The representation is been made by the Bombay Chartered Accountant’s Society to the Hon’ble Finance Minister for deferment of Income Tax Form 10B and 10BB.
Form 10B/10BB is an Audit Report for Charitable Trusts and is appropriate to the following (hereinafter referred to as eligible trusts):
- A fund or institution or trust whose income is qualified for the advantage of section 11/12.
- A fund or institution or trust or any university or other educational institution or any hospital or other medical institution whose income gets exempted under clauses (iv), (v). (vi) and (via) of section 10(23C).
Form 10B/10BB needs to be filed when the total income of the eligible trusts, prior to acknowledging the advantage of section 10(23C) or section 11/12 is more than Rs. 250,000.
New Forms 10B and 10BB were introduced vide Notification No. 7/2023 dated February 21, 2023. Form 10B is to be filed if,
- The total income of these eligible trusts, without providing effect to the provisions of sections 10(23C), sections 11, and 12 of the Act, is more than Rs 5 crores at the time of the previous year.
- These qualified trusts have obtained any foreign contribution at the time of the previous year or these qualified trust has been applicable any portion of their income outside India at the time of the previous year,
The audit report in any additional cases shall be in Form 10BB.
Unable to file the audit report as needed via section 12A(1)(b) shall result in the Charitable Trust losing exemption under section 10(23C)/section 11, making it responsible for tax on its income.
Compliance Issues
Form 10B has 49 clauses (with many subclauses) and 29 schedules. Form 10BB is a subset of Form 10B and has 32 clauses and 7 schedules. Both the forms are on the lines of Form 3CD, which is applicable to business entities with a turnover of more than Rs 10 crore.
The forms require substantial data and information related to both the current year and previous years’ operations. Eligible trusts must extract this information from their historical and current records, specifically regarding their earnings and expenditures.
Charitable trusts engage in philanthropic activities to complement government efforts in assisting underprivileged citizens. Typically, these trusts are managed by trustees and administrative staff, often lacking professional qualifications. In many cases, they rely on volunteers rather than full-time employees. The current forms are complex, with legal nuances open to various interpretations. These forms were released very late in the financial year, in February 2023, and the tools to complete them were made available only recently.
Read Also: Brief Summary of e-Filing Form 10 by Charitable Trusts
The previous Form 108 was concise and requested information readily accessible to trusts. However, gathering and organizing the data required by the new form in such a short timeframe is a significant challenge. The deadline for filing the form for the fiscal year 2022-23 is September 30, 2023.
Therefore, we request a one-year postponement of the implementation of the new forms until the assessment year 2024-25. For the assessment year 2023-24, we suggest continuing to use the old form. Without urgent corrective measures, charitable trusts may risk losing their tax exemptions, causing substantial hardship and harm to these trusts and ultimately affecting their charitable activities.
