Form 10BD of the Income Tax Act: Due Date, Applicability & How to File Online?

Imagine donating to a charity, excited about both helping a cause and claiming a tax deduction under Section 80G. But, when tax season arrives, you’re unable to claim your benefit due to missing documentation. To prevent such issues and enhance transparency, the Income Tax Department now requires trusts to issue donation certificates and file donation reports using Form 10BD.

Introduced through CBDT Notification No. 19/2021, Form 10BD ensures that every donation is accurately recorded, allowing donors to claim their deductions with ease. This process mirrors the TDS Reconciliation (TRACES) system, boosting trust and clarity between donors and charitable institutions.

Let's see how this system works and what trusts need to do to stay compliant.

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Table of content

Understanding Form 10BD of the Income Tax Act

Responsibilities of Donors and Recipients

Applicability of Form 10BD

Form 10BD Due Date

Importance of Form 10BD Compliance

Consequences of Non-filing of Form 10BD 

How to File Form 10BD Online? Process of Filing Form 10BD

How To Download Filed Form 10BD?

Conclusion

Mostly Asked Questions

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Understanding Form 10BD of the Income Tax Act

Under the Finance Act, 2021, all trusts or institutions registered under Section 80G of the Income-tax Act, 1961, will have to provide a detailed Form 10BD regarding donations received on a yearly basis. Non-filing of form will attract stringent penalties. This, in effect, is an attempt to bring transparency and avoid incorrect or fraudulent deduction claims. The entities shall ensure that information pertaining to the same is available for the correct filing of Form 10BD. These include:

• Donor’s ID: The Donor’s ID is a unique number that helps identify and check the donor’s identity. This could be a PAN (Permanent Account Number), Aadhaar number, or other valid ID, such as a Passport or Driving License. The organization or group must collect this information from each donor and include it when filling out Form 10BD.

  
  

• Donor’s Name: The Donor’s Name must exactly match the name on the ID provided (like PAN or Aadhaar). Correct spelling and accurate entry of the name are important to avoid mistakes in records and ensure the donation statement is submitted correctly.

  
  

• Donor’s Address: The Donor’s Address is an important detail for identifying donors. This includes:

  • Residential address for individual donors.

  • Office or registered address for corporate donors.

  • Complete and accurate addresses are necessary to track donors and maintain transparency in the donation process.

    
    

• Statement Number: The Statement Number is a special number given to each donation report. This helps in tracking the report for each financial year. It ensures easy access to the report during any assessment by the Income Tax Department.

  
  

• Section code (Section 35(1)(iii), Section 35(1)(ii), Section 35(1)(iia)): According to the Income Tax Act, donations can be in different categories, each with its own tax benefits. Form 10BD must include the Section Code to correctly classify the donation. The section codes to be mentioned include:

  • Section 35(1)(iii): Donations made to research institutions or associations for scientific research.

    
    

  • Section 35(1)(ii): Donations made to universities or other educational institutions involved in research.

    
    

  • Section 35(1)(iia): Donations to specific research associations engaged in social sciences or statistical research.

Accurate declaration of the section code helps determine the correct tax benefits for the donor.

• PAN/Aadhaar card/Driving License/ Passport and another unique identification number: For transparency and authenticity, donors must provide a valid identification number such as:

  • PAN: Compulsory for those eligible for tax deductions.

    
    

  • Aadhaar Card: Widely accepted as proof of identity and preferred when PAN is unavailable.

    
    

  • Driving License or Passport: May also be used in cases where PAN or Aadhaar is not available.

Ensuring these IDs are correctly submitted minimizes the risk of fraudulent claims for deductions.

• Donation type (specific, corpus, restricted grant or others): The Type of Donation needs to be categorized for accurate reporting:

  • Specific Donations: Contributions made towards a specific purpose or cause, such as building funds or research grants.

    
    

  • Corpus Donations: Large donations made to the general fund of the institution, which is not used for any specific activity but for the long-term financial stability of the trust.

    
    

  • Restricted Grant: Donations that are restricted to a specific project or purpose, ensuring funds are only used for that designated objective.

    
    

  • Others: Donations that may not fall into the above categories but still require classification.

Proper classification ensures the correct allocation of funds and clarity in accounting.

• Donation amount: This refers to the total amount donated by each donor during the financial year. It is important to record the exact donation amount to ensure transparency and prevent misreporting. The donation amount should be consistent with receipts issued to the donor.

  
  

• Mode of receipt (Cash, cheque/draft, kind, and others): The Mode of Receipt indicates how the donation was made, and there are multiple options:

  • Cash: Donations made in cash (with limitations, as donations above Rs. 2,000 cannot be made in cash if one wants a tax deduction).

    
    

  • Cheque/Draft: Payments made via bank instruments such as cheques or demand drafts.

    
    

  • Kind: Non-monetary donations like property, goods, or services. These must be appraised and valued appropriately for reporting.

    
    

  • Others: This could include electronic modes like bank transfers, credit cards, or any other form of payment.

    
    

Responsibilities of Donors and Recipients

Donors must keep proper accounts of all their transactions with eligible businesses. Every donor shall furnish Form 10BD providing details about the gift or donation, such as the name and address of the recipient, the amount of the donation, and the purpose. Moreover, recipients should also use Form 10BD to validate their information given by donors against the gifts or grants received. It is always necessary that recipients check for errors in this information and keep it for future reference.

Applicability of Form 10BD

Form 10BD income tax forms are available for submission by any organisation that is classified as a charity institution, including trusts, colleges, schools, research institutions, universities, and others. It's also crucial to remember that these organisations' funding must go towards the following: 

• Section 35 (1A) (i) 

• Section 80G (5) (viii)

  
  

Form 10BD must be used by both contributions and recipients who transact with organisations eligible for special tax treatment or tax exemptions. This includes donations made to governmental bodies, legally recognised nonprofits, and other organisations that match the criteria outlined in the Income Tax Act. Donors who give cash or non-cash items to any of the following authorised organisations are required to utilise Form 10BD. However, if recipients accept grants or donations from these sources, they also need to follow Form 10BD. Comprehensive reporting is thus ensured, and any possible misappropriation of tax-exempt money is circumvented.

Form 10BD Due Date

It is required of all qualified trusts, organisations, and institutions to file the Form 10BD contribution return by May 31st of the financial year following the year in which they received the donation. An additional charge and a penalty will be applied if a donation return or statement of donation is not provided in the allotted period. Any delay is subject to a penalty fee of Rs 200 per day under Section 234AG of the Income Tax Act. Furthermore, in accordance with Section 271K of the Act, there is a minimum penalty of Rs 10,000 and a maximum penalty of Rs 1,000,000 for failing to provide the statement of donation in Form 10BD. The Assessing Officer is able to apply the specified fine amount to the institution.

Importance of Form 10BD Compliance

Form 10BD compliance entails more than merely abiding by the law. It encourages accountability, transparency, and trust in the tax system. Donors can profit from tax advantages on their charitable gifts, while beneficiaries can demonstrate compliance with the law, enhancing their credibility and reputation.

Consequences of Non-filing of Form 10BD 

The reporting company is required to file Form 10BD, and in accordance with the recently added Section 234G, failure to do so will result in a fine of Rs. 200/-per day of delay. The above-mentioned late fees cannot be greater than the gift amount for which a Form 10BD filing delay occurred. In addition to the late charge for submitting a statement of donation in Form 10BD, non-filing such a statement would result in a penalty under Section 271K, which can be as much as Rs. 1,00,000 in addition to a minimum of Rs. 10,000.

How to File Form 10BD Online? Process of Filing Form 10BD

The Income Tax Department's official website is the only way to electronically or digitally file Form 10BD under the new regulations. It's also crucial to remember that the reporting entity's income tax return must be signed by an authorised signatory. Below is a detailed how-to for submitting Form 10BD: 

• Go to https://www.incometax.gov.in/iec/foportal/, the official Income Tax website, and sign in with legitimate credentials. 

  
  

• Form 10BD can be found by selecting "Income Tax Forms" under the "e-file" option.

  
  

• After choosing the necessary financial year, select "Continue." 

  
  

• When you select the "Provide details" tab, a new dashboard for filing Form 10BD will show up on your screen.

  
  

• Fill out this form with accurate and necessary information. As you can see, there are three sections to this form. "Basic information," "Details about the donation and donors," and "Verification" are some examples of this. 

  
  

• The system automatically fills in the first section with basic data. You can click "Confirm" without entering any information.

  
  

• Complete the second and third sections of this form with the relevant data. 

  
  

• Get an Excel template by downloading it to add the required fields. A CSV file will then start to download. 

• Once all the data has been entered, upload this CSV file to the portal. To retrieve the data supplied, this web form has an auto-save feature.

  
  

• Select the "Verification" option to access all pertinent information.

  
  

• Click "Proceed to verify" if all the information is correct after verifying. 

  
  

• Click "Yes" to download the acknowledgement and submit the form. Moreover, you can readily amend Form 10BD if there are any mistakes. 

  
  

Following the submission of this Form 10BD, the nonprofit organisation must download Form 10BE, issue a Certification of Donation, and deliver it to the contributors. After that, they are eligible to deduct under Section 35 or Section 80G of the Income Tax Act. 

How To Download Filed Form 10BD?

Here is a comprehensive, step-by-step guide to download the filed Form 10BD:

• Select the e-file option from the Income Tax Department's official website.

• Select "View filed forms" from the drop-down after clicking "Income Tax Forms". 

• A fresh webpage will show up. Select "Statement of Particulars to be filed". 

• Next, select "View all" by tapping on it. 

• Lastly, click "Download form" to get your electronically filed Form 10BD. 

Conclusion

The Finance Act 2021's introduction of a new amendment has made Form 10BD a critical step towards increasing the openness of donation reporting systems. Charity organisations must understand all there is to know about Form 10BD income tax and how to file it online.

FAQ

Q1. Is e-verification required when submitting Form 10BD?

Yes, you need to complete the e-verification process using your registered mobile number. This can be done through DSC, EVC, or OTP. Only after e-verification is your Form 10BD submission considered complete.

Q2. Should donations in kind be reported in Form 10BD?

Yes, all donations in kind received must be reported in Form 10BD. Note that donors cannot claim a deduction under Section 80G for such contributions. Trusts must provide the donor’s details, and although there is no specific valuation method prescribed in the Income Tax Act, these donations should be reported at a fair and reasonable value based on the trust’s records.

Q3. Do I need to report every donation, no matter the amount, in Form 10BD?

Yes, every donation, regardless of size, must be reported in Form 10BD. There is no minimum amount for reporting donations, so all contributions, big or small, must be listed.

Q4. Do I need to report cash donations over Rs. 2,000 in Form 10BD?

Yes, even though the Section 80G deduction for cash donations is limited to Rs. 2,000, you still have to report the total amount of any cash donation that goes over this limit in Form 10BD.

Q5. How do I report multiple donations from the same donor in Form 10BD?

You should add up all the donations from the same person and report them as one entry in Form 10BD. But, the donations must be of the same type and received in the same way to be combined. If they are different, each donation should be reported separately based on its type and how it was received.

Q6. How do I report donations made by more than one person together?

For donations made by multiple people, you should report each person's share. If the donors didn't specify how much each one gave, the donation will be divided equally among them.

Q7. Do I need to submit Form 10BD if my trust only has provisional approval under Section 80G?

Yes, trusts with temporary approval under Section 80G or section 35 still need to submit Form 10BD. Whether the approval is regular or provisional doesn't change the need to file the form.

Q8. What happens if I fail to submit Form 10BD?

If you don't submit Form 10BD, you will be charged Rs. 200 per day under Section 234G until you file the form. Additionally, you could face a penalty of Rs. 10,000 to Rs. 1,00,000 under Section 271K.

Q9. Do I need to include anonymous donations in Form 10BD?

No, you don't need to include anonymous donations in Form 10BD.

Q10. Can I claim deduction under Section 80G if the trust fails to file Form 10BD?

No, you cannot claim a deduction under Section 80G if the trust doesn't file Form 10BD.

Q11. Will the deduction under Section 80G be possible in the new tax regime once the form 10BD is filed by the trust?

No, the deduction under Section 80G is not available in the new tax regime, even if Form 10BD is filed.

Q12. How do I know if a trust has filed Form 10BD?

You will receive Form 10BE from the trust, which is an official donation certificate from the income tax department after they file Form 10BD.

Q13. Can a trust file more than one Form 10BD?

Yes, a trust can file multiple Form 10BDs as needed without any limits.