The Income Tax administration has released Draft Form No. 109, a structured compliance form designed for registered non-profit organisations to report the accumulation or setting apart of income under Section 342(1). The draft aims to standardise reporting requirements, improve transparency, and streamline monitoring of accumulated funds by tax authorities.
The form will play a crucial role in ensuring that income set aside for specific purposes is properly disclosed and tracked across tax years.
Purpose of Draft Form No. 109
Draft Form No. 109 is intended to capture detailed information about income accumulated by non-profit entities for future application. It requires organisations to specify the purpose, amount, and period of accumulation, along with governance approvals such as resolutions passed by trustees or managing committees.
This move reflects a broader push towards stronger compliance and accountability in the non-profit sector.
Key Information Required in the Form
Applicant Details
Part A of the form requires basic particulars of the applicant organisation, including:
- Full name of the registered non-profit organisation
- Address details
- Permanent Account Number (PAN)
- Email ID and contact number
- Relevant tax year
These details help tax authorities accurately identify and track filings.
Details of Accumulation
Part B focuses on accumulation specifics, requiring disclosure of:
- Purpose for which income is being accumulated
- Amount set aside
- Period of accumulation (starting and ending tax year)
- Date of resolution passed by the governing body
This ensures that funds earmarked for future use are backed by formal approvals.
Status of Accumulation From Previous Years
The draft also mandates reporting of past accumulations, including:
- Tax year of accumulation
- Date of filing Form No. 109
- Amount accumulated and applied
- Remaining balance for application
- Amount treated as specified income under relevant provisions
This section helps authorities track utilisation of previously accumulated funds.
Non-Application Due to Court Orders
Organisations must disclose instances where accumulated income could not be applied due to court orders or injunctions, along with relevant details.
Filing and Verification Requirements
The form must be submitted to the Assessing Officer and signed by a trustee or principal officer of the organisation. Amounts are required to be reported in rupees unless otherwise specified.
Certain fields may be pre-filled to simplify the filing process and reduce errors.
Impact on Non-Profit Organisations
The introduction of Draft Form No. 109 is expected to:
- Enhance transparency in accumulation of funds
- Improve monitoring of utilisation of income
- Reduce ambiguity in reporting requirements
- Strengthen governance and accountability
Non-profits may need to maintain more detailed records and documentation to ensure accurate reporting.
Conclusion
Draft Form No. 109 represents a significant step towards structured reporting of accumulated income under Section 342(1). By requiring detailed disclosures on purpose, timelines, and utilisation, the form is likely to improve compliance standards while giving tax authorities better visibility into the financial practices of non-profit organisations.
Stakeholders should review the draft carefully and prepare systems to capture the required information once the form is finalised.
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