Applicability of Form 10BB
It will be applicable where :
- Total income of the trust or institutions does not exceed Rs. 5 crore during the previous year.
- Where the trust or institution does not receive any amount of foreign contribution.
- Where the trust or institution does not apply any amount of its income outside India in the previous year.
This time Form No. 10BB which is launched for A.Y. 2023-24 required disclosure of various details by the auditee for the purpose of transparency and compliance. However under this Article, I have tried to discuss few such disclosure requirements by the auditee which is linked with their commencement of activities, Place of keeping books of accounts & Furnishing of statement with respect to Donation received by such Trust/ Institution.
Let's start with such disclosure requirement mandated by the Audit Report i.e. Form No. 10BB as follows:
(I) COMMENCEMENT OF ACTIVITIES
Point No. 10 of the Audit Report 10BB requires the assessee to furnish details which is
(i) Where the auditee has been granted provisional registration or provisional approval, whether activities have commenced during the previous year –
Under the existing Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 require New Trust/ Institution need to go through two-tier process for registration
- To apply for Provisional registration - Prior to 1 month of commencement of activities by Filing Form 10A.
- Again apply for regular registration - Within 6 months of commencement of activities OR within 6 months prior to expiry of Provisional reg., whichever is earlier.
If yes is selected then it asked for:
Date of commencement of activities-
(ii) Whether application for registration under section sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or approval under clause (iii) of the first proviso to Clause (23C) of section 10 has been filed-
Let us understand, what is this application-
- Filing of Form 10AB- With the amendment made in Registration procedure, New Trust/ Institution which is provisionally registered or obtained provisional approval need to again apply for regular registration- Within 6 month of the commencement of activities Or within 6 month prior to expiry of Provisional reg. whichever is earlier by filing Form 10AB.
If yes is selected, then fill date of filing the application-
Consequences in case of Non-filing of Form 10AB
Where the Trust / Institution failed to file Form 10AB within the stipulated period provided above, Upon violation of these, it shall be deemed to have been converted into any form not eligible for registration or approval in the previous year in which such period expires.
It is further proposed principal officer or the trustee of the specified person, as the case may be, and the specified person shall also be liable to pay the tax on accreted income at the maximum marginal rate to the credit of the Central Government within fourteen days from the end of the previous year in a case referred to Sec 115TD of the Act.
Accreted income is the amount of aggregate of Fair Market Value (FMV) of total assets as reduced by the liability as on the specified date. The method of valuation has been prescribed in rules which is liable to tax at Maximum Marginal Rate.
(II) DETAILS OF PLACE WHERE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS HAVE BEEN MAINTAINED
Point No. 11 of the Audit Report 10BB require the assessee to furnish details which is
Rule 17AA of the Income Tax Rules provides Every fund or institution or trust or any university or other educational institution or any hospital or other medical institution under clause (a) of the tenth proviso to clause (23C) of section 10 of the Act or sub-clause (i) of clause (b) of sub-section (1) of section 12A of the Act shall keep and maintain the following, namely:
(i) Books of account
(ii) Record of all projected and institution run by the assessee
(iii) Record of income
(iv) Record of application of income out of income of current year
(v) Record of application/money invested out of income of preceding the current previous year.
(vi) Record of voluntary contribution in the form of Corpus.
(vii) Record of contribution received for repair and renovation.
(viii)Record of loan and borrowing
(ix) Record of movable and immovable property.
(x) Record of specified person
The books of accounts and other documents specified in sub-rule (1) may be kept in written form or in electronic form or in digital form or as print-outs of data stored in electronic form or in digital form or any other form of electromagnetic data storage device at its Registered office.
However, all or any of the books of account and other documents as referred above may be kept at such other place in India as the management may decide by way of a resolution and intimation to the jurisdictional Assessing Officer in writing within 7 days.
The books of account and other documents specified in sub-rule (1) shall be kept and maintained for a period of ten years from the end of the relevant assessment year.
(i) Whether the books of account and other documents have been kept and maintained in the form and manner and at such place as prescribed under rule 17AA by the auditee?
(ii) If Yes in (i) above, whether books of account are maintained at registered Office ?
(iii) If No in (ii) above, provide the following details regarding any place other than the registered place where the books of account are maintained
(a) Address of such place where the books are maintained -
(b) Date of decision by management to keep account at such place -
(c) Date of intimation to Assessing Officer that accounts are kept at such place under proviso to sub-rule (3) of rule 17AA
(III) VOLUNTARY CONTRIBUTION
Rule 18AB of the Income Tax act provides that any university, college, institution or fund referred to in clause (viii) of sub-section (5) of section 80G and clause (i) to sub-section (1A) of section 35 is required to furnish statement of particulars with respect to Donation received from the person by submitting Form 10BD.
While filing form 10BD, assessee will provide the following details :
- Details of Donor such as
- ID- If Pan or aadhar is available, it should be mandatorily filled
If Pan or Aadhaar not available
- Then Taxpayer identification number, Passport no, Voter id, Driving licence, ration card
- Type of Donation – whether it is Corpus, Specific Grant or other
- Mode of Donation- Cash, Kind, Electronic mode or others.
- Amount of Donation
Point No. 12, 13 & 14 of the Audit Report 10BB require the assesse to furnish details which is :
Whether auditee has filed Form No. 10BD for the previous year?
If yes, is selected then,
- Sum total of donations reported in Form No. 10BD furnished by the auditee for the previous year ?
- Donations not reported in Form No 10BD/ Not required to fill Form No. 10BD
- Donation not reported on account of non-availability of any ID such as (PAN, aadhar, Passport No, Voter Id, Driving Licence, ration Card etc).
- Not required to file Form No 10BD because not registered u/s 80G or Sec 35(1).
Consequences of Non-Filing of Form 10BD
Non-filling of Form 10BD will attract a fee of Rs.200/- per day of delay as per newly inserted section 234G. Apart from the fee for delay in furnishing statement of donations in Form 10BD, failure to file such statement will also attract penalty u/s 271K, which shall not be less than Rs.10,000/- and which may extend up to Rs.1,00,000.