Form 10B

Introduction:

Form 10B is an audit report which is provided by a CA upon nomination by the taxpayer. Form 10B can be accessed and submitted in the online mode only and it is to be filed on or before the specified date referred to in Section 44AB, i.e., a month prior to the due date for furnishing the Return of Income under sub-section (1) of Section 139.

The purpose of Form 10B is to provide an audit report for a charitable or religious trust or institution. This form is required when the total income of the entity for the relevant previous year has exceeded the maximum amount which is not chargeable to tax. The audit report is necessary for the entity to claim exemption under Sections 11 and 12 of the Income Tax Act. The accounts of such trust or institution must be audited by an accountant as defined in Section 288 (2) of the Act. This ensures that the financial activities of the trust or institution are transparent and accountable, which is crucial for maintaining public trust and ensuring compliance with tax laws.

Eligibility:

Form 10B is required to be filed by a person who is responsible for auditing the accounts of a trust or institution that is eligible for tax exemption under Section 11 of the Income Tax Act, 1961. The purpose of the form is to provide details of the income and expenditure of the trust or institution and to certify that the accounts have been audited in Income Tax Act.

Specifically, Form 10B is required to be filed by the following entities:

• Charitable or religious trusts that are registered under Section 12A of the Income Tax Act and are claiming exemption under Section 11.
• Educational institutions that are claiming exemption under Section 10(23C)(iiiad) of the Income Tax Act.
• Hospitals that are claiming exemption under Section 10(23C)(iiiae) of the Income Tax Act.

The form must be filed on an annual basis along with the income tax return of the trust or institution. Failure to file Form 10B may result in penalties or other consequences under the Income Tax Act.

Form 10B is applicable in any of the following conditions: –

• Total Income of the such organisation (as mentioned above) exceeds INR five crores during the previous year without giving effect to the provisions of the sub-clauses (iv), (v), (vi) and (via) of the said clauses or
• Such organisation has received any foreign contribution during the previous year or
• Such organisation has applied any part of its income outside India during the previous year.

Benefits:

• Tax Exemption: It helps the trust maintain its tax-exempt status, meaning it doesn't have to pay income tax on its earnings.
• Transparency: Filing Form 10B shows that the trust is following the rules and being transparent about its financial activities.
• Legal Compliance: It ensures that the trust is operating within the legal framework and using its funds for charitable or religious purposes, as required by law.
• Donor Confidence: When donors see that the trust has filed Form 10B, it gives them confidence that their donations are being used for the right purposes.

In summary, Form 10B helps charitable and religious trusts stay tax-exempt, demonstrate transparency, follow legal rules, and gain donor trust.

Process to file Form 10b of Income Tax Act:

• Log in to the official Income Tax e-filing website by using valid CA credentials.

• Select ‘Pending Actions’ from the taskbar and click on ‘Worklist’ to get a view of the forms that have been assigned by the taxpayer to you.

• You can accept or reject forms assigned to you by the taxpayer and specify a reason that will be sent to the taxpayer. You can accept a form from the list of forms assigned to you by the relevant taxpayer. Once you accept the form, the ‘Accepted Successfully’ message will be displayed on your screen.

• From the ‘Worklist’, click on the ‘File Form’ button beside the details of the form.

• After verifying all the details of Form 10B visible on the screen, click on ‘Continue’.

• An instruction page will open; click on ‘Let’s Get Started’.

• Provide details for each section and then click on ‘Preview’.