Sec 10(23)C Exemption
This query is : Resolved
22 January 2011
Sir,
Is a school, registered under societies Act, required to be registered under Income Tax Act to get exemption u/s 10(23)C ?
If yes what is the procedure for registration?
Pls guide me.
Is a school, registered under societies Act, required to be registered under Income Tax Act to get exemption u/s 10(23)C ?
If yes what is the procedure for registration?
Pls guide me.
23 January 2011
Yes an application has tobe made to the Director of Income Tax (Exemptions)in form no 56
Message likes :
1 times
26 January 2011
Could you pls give me the data regarding following two cases
Case-1
a school registered under societies Act & IncomeTax Act[sec-10(23)C]
Case-2
a school registered under societies Act but not registered under Income Tax Act[sec-10(23)C]
Question-
In both the cases
1) What are the applicable tax rates?
2) Whether the Audit is compulsory or Not?
3) Form of Audit Report? (10BB or 3CB/3CD)
4) Form of ITR? (ITR-4 /ITR-7)
Thank you.
Case-1
a school registered under societies Act & IncomeTax Act[sec-10(23)C]
Case-2
a school registered under societies Act but not registered under Income Tax Act[sec-10(23)C]
Question-
In both the cases
1) What are the applicable tax rates?
2) Whether the Audit is compulsory or Not?
3) Form of Audit Report? (10BB or 3CB/3CD)
4) Form of ITR? (ITR-4 /ITR-7)
Thank you.
23 July 2025
To help you understand the different scenarios of **Section 10(23C) Exemption** under the Income Tax Act, let's break it down:
### **Case 1: School Registered under Societies Act & Income Tax Act (Sec 10(23C))**
If a school is **registered under the Societies Act** and also gets an **exemption under Section 10(23C)** of the Income Tax Act, it means that the school is considered an **exempt entity** under the provisions for **educational institutions**.
1. **Tax Rates:**
* **Exempt under Section 10(23C)**: The income of the school will be **exempt from tax**, provided the income is used for the purposes of the educational institution.
* If the exemption is **granted under 10(23C)(iiiad)** (i.e., the income is **less than ₹1 crore**), then the school is **fully exempt from income tax**.
* If the exemption is under **10(23C)(vi)** (i.e., the school is a **fund or institution**), it may be subject to certain conditions. The exemption applies if the income is used for educational or charitable purposes.
2. **Audit Requirement:**
* Yes, **audit is compulsory** under Section 10(23C) if the institution is receiving **income above the prescribed limit** or if the institution has income of **₹1 crore or more**.
* The audit will typically be done under **Section 44AB** of the Income Tax Act.
3. **Form of Audit Report:**
* The appropriate **audit report** form will be **Form 10BB**, which is specifically meant for institutions claiming exemption under Section 10(23C).
* This form is used to report the institution's income and its compliance with the conditions for exemption.
4. **Form of ITR:**
* The school should file **ITR-7** (Income Tax Return for persons who are claiming exemption under Section 10(23C)).
### **Case 2: School Registered under Societies Act but Not Registered under Income Tax Act (Sec 10(23C))**
In this case, the school has not registered under Section 10(23C), which means it has not obtained the **exemption under the Income Tax Act**.
1. **Tax Rates:**
* If the school is **not registered under 10(23C)**, then the income will not be **exempt**, and it will be liable to pay taxes as per the normal provisions of the Income Tax Act.
* The applicable tax rates will depend on the nature of income and the classification of the school. If it is not receiving any other exemption, then it will pay tax on the income at the **normal rates** for an **educational institution** or as a **charitable institution**.
2. **Audit Requirement:**
* Since the school is not registered for **exemption under Section 10(23C)**, it will still be required to undergo an audit under **Section 44AB** if its **total income exceeds ₹2.5 lakh** in a financial year or if its **gross receipts exceed ₹25 lakh**.
* If it's registered as a charitable organization, then the provisions of Section 12A might apply, and the audit is mandatory.
3. **Form of Audit Report:**
* For **charitable institutions**, the form of audit report is usually **Form 10B** (for income claimed as exempt under 12A). However, if the school has **other income** not related to its educational activities, it would be reported under **Form 3CB/3CD**.
4. **Form of ITR:**
* If the school is not claiming any exemption, it will file **ITR-7** (for institutions claiming exemption under other sections, such as 11, 12, etc.).
### **Summary of the Differences:**
| **Parameter** | **Case 1: Registered under Societies Act & Sec 10(23C)** | **Case 2: Registered under Societies Act but Not Under Sec 10(23C)** |
| --------------------- | -------------------------------------------------------- | -------------------------------------------------------------------- |
| **Tax Rates** | Exempt (under Sec 10(23C) if conditions fulfilled) | Taxable under normal tax rates |
| **Audit Requirement** | Yes, compulsory under Sec 44AB | Yes, compulsory if income/receipts exceed the prescribed limit |
| **Audit Report Form** | **Form 10BB** | **Form 10B/3CB/3CD** |
| **ITR Form** | **ITR-7** | **ITR-7** |
---
### **Procedure for Registration under Sec 10(23C)**:
To get an exemption under Section 10(23C), you must apply for **registration with the Director of Income Tax (Exemptions)** in **Form 56**. This will require submitting various documents that prove the nature of your institution and its income. Once registered, you will receive the **Certificate of Registration** under Section 10(23C) which makes the school eligible for tax exemptions.
---
Let me know if you need any more clarification on the process or forms!
### **Case 1: School Registered under Societies Act & Income Tax Act (Sec 10(23C))**
If a school is **registered under the Societies Act** and also gets an **exemption under Section 10(23C)** of the Income Tax Act, it means that the school is considered an **exempt entity** under the provisions for **educational institutions**.
1. **Tax Rates:**
* **Exempt under Section 10(23C)**: The income of the school will be **exempt from tax**, provided the income is used for the purposes of the educational institution.
* If the exemption is **granted under 10(23C)(iiiad)** (i.e., the income is **less than ₹1 crore**), then the school is **fully exempt from income tax**.
* If the exemption is under **10(23C)(vi)** (i.e., the school is a **fund or institution**), it may be subject to certain conditions. The exemption applies if the income is used for educational or charitable purposes.
2. **Audit Requirement:**
* Yes, **audit is compulsory** under Section 10(23C) if the institution is receiving **income above the prescribed limit** or if the institution has income of **₹1 crore or more**.
* The audit will typically be done under **Section 44AB** of the Income Tax Act.
3. **Form of Audit Report:**
* The appropriate **audit report** form will be **Form 10BB**, which is specifically meant for institutions claiming exemption under Section 10(23C).
* This form is used to report the institution's income and its compliance with the conditions for exemption.
4. **Form of ITR:**
* The school should file **ITR-7** (Income Tax Return for persons who are claiming exemption under Section 10(23C)).
### **Case 2: School Registered under Societies Act but Not Registered under Income Tax Act (Sec 10(23C))**
In this case, the school has not registered under Section 10(23C), which means it has not obtained the **exemption under the Income Tax Act**.
1. **Tax Rates:**
* If the school is **not registered under 10(23C)**, then the income will not be **exempt**, and it will be liable to pay taxes as per the normal provisions of the Income Tax Act.
* The applicable tax rates will depend on the nature of income and the classification of the school. If it is not receiving any other exemption, then it will pay tax on the income at the **normal rates** for an **educational institution** or as a **charitable institution**.
2. **Audit Requirement:**
* Since the school is not registered for **exemption under Section 10(23C)**, it will still be required to undergo an audit under **Section 44AB** if its **total income exceeds ₹2.5 lakh** in a financial year or if its **gross receipts exceed ₹25 lakh**.
* If it's registered as a charitable organization, then the provisions of Section 12A might apply, and the audit is mandatory.
3. **Form of Audit Report:**
* For **charitable institutions**, the form of audit report is usually **Form 10B** (for income claimed as exempt under 12A). However, if the school has **other income** not related to its educational activities, it would be reported under **Form 3CB/3CD**.
4. **Form of ITR:**
* If the school is not claiming any exemption, it will file **ITR-7** (for institutions claiming exemption under other sections, such as 11, 12, etc.).
### **Summary of the Differences:**
| **Parameter** | **Case 1: Registered under Societies Act & Sec 10(23C)** | **Case 2: Registered under Societies Act but Not Under Sec 10(23C)** |
| --------------------- | -------------------------------------------------------- | -------------------------------------------------------------------- |
| **Tax Rates** | Exempt (under Sec 10(23C) if conditions fulfilled) | Taxable under normal tax rates |
| **Audit Requirement** | Yes, compulsory under Sec 44AB | Yes, compulsory if income/receipts exceed the prescribed limit |
| **Audit Report Form** | **Form 10BB** | **Form 10B/3CB/3CD** |
| **ITR Form** | **ITR-7** | **ITR-7** |
---
### **Procedure for Registration under Sec 10(23C)**:
To get an exemption under Section 10(23C), you must apply for **registration with the Director of Income Tax (Exemptions)** in **Form 56**. This will require submitting various documents that prove the nature of your institution and its income. Once registered, you will receive the **Certificate of Registration** under Section 10(23C) which makes the school eligible for tax exemptions.
---
Let me know if you need any more clarification on the process or forms!
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Notice from IT DEPTT IF FD AMOUNT EXCEEDS 10 LACS
- Applicablity on tds
- Unable to generate and save json file for updated return
- GST payable under RCM
- WRONGLY UPLOADED 10IF FOR COOPERATIVE SOCIETY
- PRODUCT AND SERVICE CATEGORY CODE
- Regarding TDS not deducted on rent
- Audit of F and O T/O
- Inverted Tax Structure & Unutilized ITC on Services
- Tax audit & Switching from Presumptive taxation
- Import purchase entry
- Rule 54(1A) for Distributing ITC
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
- CA Articleship Extension Matter
- GST OFFICER WRONG NOTICE
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Revision under Section 264 in The Income Tax Act, 1961
- TDS under section 195.
Trending Online Classes
-
LIVE Course on GSTR-9 & GSTR-9C (Technical | Practical | Concept - Based)
Sachin Jain03 November 2025
CAclubindia
