Indore (Madhya Pradesh): A charitable organization or trust registered under Section 12-A or 10(23C) is required to file an audit report in Form 10B. If it has a total income of Rs 5 crore or more in the financial year and has received foreign contributions, Form 10B must be filed.. The ITR forms must be uploaded on the income tax portal before October 31.
CA Bhagwan Agarwal disclosed this while addressing a seminar organised by the Tax Practitioners' Association and the Indore CA branch on Friday. The subject of the seminar was ‘Audit Reports to be Filed by CHARITABLE ORGANIZATIONS, Forms 10B, 10BB, and ITR-7’.
CA Agarwal said that taxpayers were required to provide information like the main business activities of the organization and the total revenue and expenditure incurred during the year to fulfill the trust’s purpose. If income was used for purposes other than the trust’s purpose, details of such use must be submitted.
The organization’s profit reserves should be a maximum of 15% of its total income. In other words, charitable trusts or institutions should not spend less than 85% of their total income on trust activities. Details of any investments in funds or other assets and the details of the organization’s income and expenditure account should be filled.
The details of donations and transfers to other trusts and the voluntary contributions received in the previous year and any anonymous donations made in the previous year should also be mentioned in the ITR.
CA Agarwal said that these audit reports were difficult and must be prepared with due care. Even the slightest negligence could result in an income tax notice.
He said that this action by the income tax department would curb fraudulent organizations that were evading taxes by claiming false exemptions. Furthermore, organizations were required to maintain their books of accounts and other records with utmost care.
Earlier, CA JP Saraf, president of the Tax Practitioners' Association, said that the government was closely monitoring the taxation of charitable organizations for the past few years. New income tax provisions had largely curbed fraudulent organizations that used to claim false exemptions.
