What Is Form 10B and 10BB?
The proposed new Form 10B of Income tax Act is intended to help the tax department to obtain more information from charitable trusts and organizations and to make the auditors’ and their clients (charitable institutions) burdensome tasks. You can also complete your ITR 7 return and make a Return cum Audit report with the new 10B form.
A charitable trust/institution is required to file an audit report, together with a return of revenue, in ITR-7 in Form 10B, registered either as a public charitable trust or as a corporation under the 1860 Act or as a licensed company under Section 8 of the Indian Companies Act.
Applicability of form 10B
Given the onerous reporting requirements, small trusts will not be able to bear the elevated fees that would be charged for such reporting. Accordingly, Form 10B, as amended, should be made applicable only to large public charitable trusts with gross revenue prior to application under section 11 to Rs. 2 crores in excess. Furthermore, for smaller public charitable trusts with gross revenues below Rs 2 crores, the current Form 10B may continue to apply.
Given that the audit of quite a few trusts for the 2018-19 financial year has already been completed, it is necessary to make the amended Form 10B applicable from Financial Year 2020-21 onwards.
As transactional-based reporting is an annex to the amended Form 10B, the Trustee/Director/Manager should also be required to countersign it.
Limitations of Form 10bb :
Pursuant to Rule 16CC of the Income Tax Rules, 1962 the audit report of the accounts of such a fund or trust or entity or of any university or other educational institution or hospital or other medical institution is to be given in Form No. 10BB.
Such an audit report shall be submitted electronically by Rule 12(2) of the Rules of Procedure. Failure to provide such a report in the prescribed form, together with a return, results in an entity dissident from claiming exemption under section 10(230) of the Act.
The income tax commissioners are satisfied that the applicant has been prevented from filing such a form within a defined period, whilst taking into account such late applications in submitting Form No. 10BB.
