How Forms 10B and 10BB  of IT Act are critical? Consult a CA Udaipur.

Confused about income tax rules about charitable trust, religious organization, or institution? Discover the importance of Forms 10B and 10BB . A CA Udaipur or tax advisor can make all the difference.

Form 10B and Form 10BB under IT Act:-

Understanding Indian income tax rules can be tricky, particularly for charitable trusts, religious groups, and institutions like schools and hospitals.

Two important documents in this process are (1) Forms 10B and (2) 10BB. Each of these forms has a specific role to play in making sure, whether organizations are following tax law or not.

1. All about Form 10B:-

Form 10B:-

Under Section 12A of the Income Tax Act, 1961, Form 10B is used to submit audit reports of charitable organizations, universities, educational institutions, hospitals, or other medical institutions if their total income in the previous financial year exceeds Rs. 5 crore.

Form 10B Applicability

Form 10B of the Income Tax Act is required under specific conditions for trusts and institutions registered under Section 12. This form must be filed in the following situations:

1. If the total income of the trust or institution exceeds ₹5 crore in the previous year, without considering the exemptions provided under: Sub-clauses (iv), (v), (vi), and (via) of clause 23C of section 10 Sections 11 and 12 of the Act. or 
2. If the trust or institution received any foreign contributions during the previous year , regardless of whether it is registered under Section 12A or approved under Section 10(23C).
3.  If the trust or institution applied any portion of its income outside India in the previous year.

Purpose of Form 10B

The primary purpose of Form 10B is the audit of the trust’s financial statements. This form helps ensure that the trust’s accounts are accurate and comply with the relevant provisions of the Income Tax Act. By submitting this form, a trust demonstrates that its operations are in line with the requirements for tax exemption.

Information Required

When filling out Form 10B, you’ll need to provide:

Trust Details:

Basic information about the trust, including its name, address, and registration details.

Audit Report:

An auditor’s report from a Chartered Accountant verifying that the trust’s accounts have been audited and comply with legal standards.

Financial Statements:

Comprehensive financial details, including the balance sheet, income and expenditure account, and receipts and payments account.

Filing Process

Due Date:

Form 10B must be filed by September 30 of the assessment year, in conjunction with the trust’s income tax return.

Submission:

The completed form, along with the audit report, is required to be submitted to the income tax authorities.

Completing and submitting the Form 10B ensures that your trust remains compliant with tax regulations and continue to enjoy the benefit from the exemptions available under the law.

All about Form 10BB:-

Form 10BB:-

Form 10BB is for educational and medical institutions that seek exemptions under Section 10(23C) of the Income Tax Act. This section is designed to provide tax relief to the institutions who meet certain criteria and are used for public welfare.

Purpose of Form 10BB

The goal of Form 10BB is to claim tax exemptions for institutions engaged in educational or medical activities. It helps institutions to prove that they meet the criteria set out in Section 10(23C) and are eligible for tax benefits.

Information Required

When completing Form 10BB, institutions must provide:

Institution Details:

Information about the institution, including its name, address, and activities.

Income Details:

Comprehensive details about the institution’s income that is being claimed as exempt.

Compliance Proof:

Documentation proving that the institution complies with the requirements under Section 10(23C).

Filing Process

Due Date:

 Form 10BB should be filed by the due date i.e 30^th September of every year   for the institution’s income tax return..

Submission:

This form is to be submitted along with the institution’s income tax return.

Key Takeaways

For both charitable trusts and educational or medical institutions, the accurate and timely filing of Forms 10B and 10BB is crucial for maintaining tax-exempt status and adhering to legal requirements. These forms serve as a means to demonstrate compliance and ensure that your organization benefits from the available tax relief.

Tips for Effective Filing

Maintain Accurate Records:

Keep detailed financial records and documentation to support the information provided in these forms.

Adhere to Deadlines:

File both forms by their respective deadlines to avoid penalties and ensure continued compliance.

By understanding and properly handling Forms 10B and 10BB, you can ensure that your organization remains compliant with tax regulations and continues to enjoy the benefits it’s entitled to. Struggling to make sense of India’s complex income tax regulations for your charitable, religious, or institutional organization? Learn how Forms 10B and 10BB are critical to staying compliant. Consult a CA Udaipur or tax advisor to navigate the process with ease.