BCAS asks for deferment of form 10B and 10BB
Introduction:
The Bombay Chartered Accountants Society, representing the interests of charitable trusts in India, has urgently sought a one-year deferment for the applicability of Form 10B/10BB, the Audit Report for Charitable Trusts. This request, addressed to the Hon’ble Finance Minister of the Government of India, is based on significant challenges and issues faced by eligible trusts in complying with the newly introduced forms.
Background:
Form 10B/10BB is an essential audit report applicable to eligible trusts, encompassing various institutions, universities, hospitals, and philanthropic organizations whose income qualifies for specific tax exemptions under Indian tax law. The threshold for filing these forms is if the total income of such eligible trusts, before considering tax benefits, exceeds Rs. 250,000.
New Forms 10B and 10BB were introduced on February 21, 2023, with specific criteria for their usage. Form 10B is obligatory when the total income of an eligible trust exceeds five crores, if the trust received foreign contributions, or if it applied any part of its income outside India. In all other cases, audit reports are filed in Form 10BB.
Failure to file the audit report as mandated can lead to charitable trusts losing their exemption under relevant sections of the tax code, making them liable to taxation on their income.
Problems and Issues Regarding Compliance:
The main challenge charitable trusts face is the complexity and extensive requirements of Forms 10B and 10BB. These forms mirror Form 3CD, designed for large business entities with turnovers exceeding Rs. 10 crore. Extracting and compiling data from past and present records related to receipts and expenditures is a substantial task for trusts.
Most charitable trusts operate with the help of volunteers and non-professionally qualified administrative staff. The current forms demand a deep understanding of tax law, which may result in various interpretations and complications. Additionally, the forms were introduced late in the financial year, with the utility to fill them made available only shortly before the deadline.
The transition from the old, simpler Form 10B to the new comprehensive forms within a short timeframe is posing a considerable challenge for charitable trusts. The due date to file these forms for the fiscal year 2022-23 is September 30, 2023.
Conclusion:
In light of the significant challenges and hardships faced by charitable trusts in complying with the new audit requirements, the Bombay Chartered Accountants Society urgently requests a one-year deferment for the applicability of Forms 10B and 10BB. They propose that the old form should continue to apply for assessment year 2023-24 and 2024-25. Failing to take urgent remedial action may result in trusts losing their exemption, ultimately impacting their charitable activities.
The society awaits an early and favorable response from the government to alleviate the burden on charitable trusts and ensure the continuity of their vital philanthropic work.
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