Form 10B Applicability: A Guide for Charitable and Religious Trusts

If charitable or religious trusts or institutions meet specific predetermined requirements, the Indian government waives the income tax that would otherwise apply to their income. One of the many requirements outlined in the IT Act of 1961 is that trusts and institutions can be eligible for exemptions if their accounts get audited and the audit report is submitted on Form 10B (or Form 10BB, if applicable) by the deadline. In this post, we define Form 10B, discuss its applicability, and provide additional information for pertinent assessments.

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Table of Content

What is Form 10B?

Contents of Form 10B

Form 10B Applicability

Due Date for Form 10B

Conclusion

Most Asked Questions

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What is Form 10B?

Taxpayers registered as charitable or religious trusts or institutions under Section 12A or who have applied for registration by filing Form 10A may submit an audit report using Form 10B. To access, modify, review, and submit Form 10 B of the Income Tax Act, the taxpayer must add a designated CA through the My CA Service. Form 10BB was previously applicable to funds, institutions, trusts, hospitals, educational institutions, and universities under Section 10(23C) of the Income Tax Act. Form 10B was previously only applicable to trusts and institutions registered under Section 12A. By revising this section, the Income Tax (Third Amendment) Rules 2023 expanded the use of Form 10B to include organizations covered by Sections 12 and 10(23C). The audit reports of charitable funds, educational institutions, hospitals, universities, and other medical facilities whose total revenue surpassed Rs. 5 crores in the preceding fiscal year are now subject to Form 10B following the amendment.

Contents of Form 10B

Before submitting Form 10B, a chartered accountant (CA) must fill out the following five main sections: 

• Annexure I: Provides information on revenue received for religious or charitable causes.

  
  

• Annexure II: Lists the income or assets utilized for the benefit of the people listed in Section 13(3) of the Income Tax Act.

  
  

• Annexure III: Describes past investments in which the people listed in Section 13(3) have a significant stake.

  
  

• Validation: Demands that the CA confirm the completeness and correctness of the data entered on the form.

  
  

• Attachments: Permits the attachment of pertinent files and documents to support the data entered in the form.

Form 10B Applicability

As previously stated, the Income Tax Act's Third Amendment amended the Form 10B applicability rules. As a result, all trusts and organizations registered under Section 12 must submit Form 10B starting in AY 2023–2024. When any of the following circumstances get fulfilled, the Income Tax Act's re-notified Form 10B becomes applicable:

1. Without applying the provisions of the following clause or section, as applicable, the auditee's total income for the previous fiscal year exceeded Rs. 5 crores, regardless of whether registered under Section 12AB or Section 10(23C):

• Clause 23C, subclauses (iv), (v), (vi), and (via) of Section 10

  
  

• The Act's Sections 11 and 12

2. During the previous fiscal year, the auditee received no foreign contributions.

3. During the previous fiscal year, the auditee spent a part of their income outside India.

In this sense, "auditee" refers to any trust fund, organization, hospital, university, educational institution, or other medical facility mentioned in clause 23C of Section 10 or its subclauses (iv), (v), (vi), and (via). It encompasses any organization or trust mentioned in Sections 11 or 12 of the Income Tax Act.

Due Date for Form 10B

When submitting Form 10B, trusts, institutions, hospitals, and universities registered under section 12A or 10(23C) are required to submit a tax audit report. According to the law, Form 10B must be submitted for any previous year at least one month prior to the deadline for filing an income tax return. The 30th day of the assessment year is typically the deadline for submitting the tax audit report. For instance, the deadline for submitting Form 10B for FY 2023–2024 is September 30, 2024.

Conclusion

For institutions, NGOs, and charitable and religious trusts registered under Section 12A or 10(23C), Form 10B is a required audit report. It guarantees adherence to tax laws and offers a thorough rundown of the company's financial operations. These entities need to comprehend the application, deadline, and filing procedure of Form 10B to preserve their tax compliance and eligibility for tax benefits. Organizations can successfully file Form 10B and stay clear of any potential fines or legal repercussions by following the instructions provided in this article.

FAQ

Q1. What is Form 10B?

In cases where the assessee has applied for or is already enrolled as a charitable or religious trust or institution by filing Form 10A, the assessee may provide the audit report using Form 10B. The assessee can access Form 10B by adding the CA under the My CA service and assigning the relevant form.

Q2. What is the Method to Use Form 10B?

Form 10B would be accessible to the CA who had enrolled users in the portal for electronic filing. Additionally, the assessee should assign the form to the CAs so they can access, edit, review, and submit it.

Q3. When is Form 10B Needed to Be Furnished?

When the trust or institution's total income exceeds the maximum amount exempt from income tax in a given fiscal year, as determined without considering sections 11 and 12, the accounts for that year must audited by a certified public accountant. To do this, the person must file the receipt of the specified income along with the income return and the audit report in Form 10B, which are signed and verified by a certified public accountant.

Q4. When is Form 10B applicable?

The Income Tax Act's Third Amendment updated Form 10B's applicability. Form 10B's applicability. Now, Form 10B applies in the following situations:

• The total income of the charitable organization in a fiscal year (without implementing the provisions under Sections 11, 12, and 10 (23C)) exceeds Rs. 5 crores.

• During the fiscal year, the nonprofit received any foreign donations.

• All of the charity's revenue has been spent outside of India.

Q5. Is it essential to furnish Form 10B online?

Indeed, it is required that Form 10B be submitted online as part of the compliance process that began in AY 2020–21.

Q6. What will be the procedure to furnish Form 10B?

CA receives Form 10B through Assessee. With the assistance of an enrolled, active, and valid DSC, the CA would upload and e-verify the form. The next step in the submission process is for the assessee to accept the request and e-verify using DSC or EVC.

Q7. Who is required to file form 10B?

The Income Tax Act's Form 10B is applicable in the following situations: If the trust or institution's total income, without applying the terms of the relevant clause or section,

• Section 10's subclauses (iv), (v), (vi), and (via) of clause 23C

• Sections 11 and 12 of the Act

Over Rs. 5 crores in the preceding year;

• if any trust or institution received a foreign contribution during that year 

•  if any trust or institution used any portion of its revenue outside of India in the preceding year.

Q8. What is the last date for Form 10B?

September 30 of the Assessment Year is the deadline for submitting the Tax Audit Report. For instance, the deadline for submitting Form 10B for FY 2023–2024 is September 30, 2024.

Q9. Where to upload the Balance Sheet, Profit and loss statement and tax audit report, as applicable in new form 10B?

When submitting the form on the e-filling portal, the auditor must upload the balance sheet, profit and loss account, and audit report under 3CA/3CB as a PDF or zip file under supporting documents. Additionally, there is an optional attachment option called Miscellaneous Attachments, where you can attach any other relevant document. Note that each document's size cannot exceed 5 MB, and the total size of all the attachments cannot exceed 50 MB. Moreover, every attachment should only be in PDF or ZIP format, and every file in a ZIP folder should only contain PDF files.

Q10. Can a filed Form 10B be revised?

Yes, the option to revise a filed Form 10B is available

Q11. What is the limit of 10B?

Form 10B must be filed by a trust or institution if its tax audit report indicates that its total revenue for the previous fiscal year exceeded Rs. 5 Crore.

Q12. Who is allowed to sign Form 10B?

A chartered accountant (CA) who has examined the trust or institution's financial records must sign and validate Form 10B. According to the audit, this ensures that the financial data is accurate.

Q13. What happens if Form 10B is not filed?

Exemption under Sections 11 and 12 of the Income Tax Act may not be available to the trust or institution if Form 10B is not filed by the deadline.

Q14. Is Form 10B mandatory for all charitable and religious trusts?

No, only trusts with total income exceeding ₹2.5 lakh and claiming tax exemption under Section 11 must file Form 10B.

Q15. Can a trust file Form 10B if it has not registered under Section 12A?

No, a trust must be registered under Section 12A or 12AB to be eligible for tax benefits through Form 10B.

Q16. What happens if Form 10B is not filed before the due date?

Failure to file Form 10B can lead to denial of tax exemptions, making the trust’s entire income taxable.

Q17. Can Form 10B be revised after submission?

No, once submitted, Form 10B cannot be revised. Any mistakes must be clarified with tax authorities during assessment.

Q18. Is a digital signature required for filing Form 10B?

Yes, it must be digitally signed by a Chartered Accountant before submission on the e-filing portal.

Q19. Can religious trusts earning rental income file Form 10B?

Yes, rental income is allowed if it supports charitable activities, but excessive commercial activity can disqualify the trust from tax benefits.

Q20. Do foreign donations received by a trust impact Form 10B filing?

Trusts receiving foreign donations must comply with FCRA regulations, but foreign donations do not directly affect Form 10B filing.

Q21. Can an educational institution file Form 10B instead of Form 10BB?

Educational institutions can file Form 10B only if registered under Section 12A; otherwise, they must file Form 10BB for tax exemptions.

Q22. Does an NGO need to file Form 10B if it only receives grants?

If the NGO is registered under Section 12A and claims exemptions, it must file Form 10B, regardless of whether income comes from donations or grants.

Q23. Is Form 10B applicable to newly registered trusts?

Yes, even newly registered trusts must file Form 10B if they claim tax exemption under Section 11 for the financial year.