Form 10B Income Tax: Meaning, Filing Process, and Applicability

Introduction

Many trusts and institutions often struggle to establish credibility regarding the cause, the proper use of donations, and their legality. The Indian tax system thus came up with Form 10B as a tool to bring transparency into this process. 

What is Form 10B in Income Tax?

Form 10B of Income Tax Act is an audit report that must be submitted by certain trusts and institutions. This form is filed under the Income Tax Act to confirm that the accounts of a trust or institution have been audited and are in line with tax laws. 

It helps the Income Tax Department understand whether a trust has applied its income in the right way and maintained transparency. If you are learning about income tax concepts, understanding the purpose of Form 10B is important for grasping how tax compliance works for charitable entities.

Why Form 10B is Important for Charitable and Religious Trusts

For charitable and religious trusts, tax exemptions under sections 11 and 12 depend on accurate reporting. Filing the audit report in Form 10B income tax format supports your claim for these benefits. If you run a trust or society, this form is a step to staying compliant and avoiding losing out on exemptions.

Who Needs to File Form 10B?

Applicability Under Section 12A(1)(b) of the Income Tax Act

According to the Third Amendment of the Income Tax Act, every organisation or trust registered under Section 12 is required to furnish Form 10B under certain conditions. You need to file Form 10B income tax when:

• The total income of the trust or institution, before applying Sections 11, 12, or certain sub-clauses of Section 10(23C), exceeds ₹5 crores during the previous year.
• Any foreign contribution is received during the previous year. In this case, filing is mandatory even if the organisation is not registered under Section 12A or approved under Section 10(23C).
• Any portion of the trust’s income is spent outside India during the previous year.

Entities Required to Furnish Audit Report via Form 10B

If you represent any of the following entities, you must file Form 10B income tax when any of the above scenarios apply:

• Charitable or religious trusts
• Societies
• Section 8 companies
• Universities and educational institutions
• Hospitals and medical institutions

In addition, you must have an audit done by a Chartered Accountant and submit the audit report with Form 10B on the Income Tax Department’s e-filing portal. If you’re building your understanding of income tax basics or planning compliance for your organisation, it helps to stay updated with the current filing rules for Form 10B of Income Tax Act. 

Purpose of Filing Form 10B

Ensuring Transparency in Income and Expenditure

When you file Form 10B income tax report, it gives the tax authorities a clear view of how funds are raised, spent, or accumulated. It promotes accountability, which is important in sectors dealing with public or donor funds.

Claiming Tax Exemptions for Trusts and Institutions

To claim exemptions under Section 11, the trust must prove its income is applied for charitable or religious purposes. Form 10B helps validate this application of income. Without it, the claim for exemption may be rejected.

Conditions for Filing Form 10B

Income Threshold Limits

You must file Form 10B if your trust’s or institution’s total income (before claiming exemptions under Sections 11, 12, or Section 10(23C)) exceeds ₹5 crore in a financial year. An audit report from a Chartered Accountant is required along with the form.

Audit Requirements for Trusts, Societies, and Section 8 Companies

To file Form 10B income tax report, the trust, society, or Section 8 company must get its accounts audited by a Chartered Accountant. For this process:

• Both the taxpayer and the Chartered Accountant must be registered on the e-filing portal
• PAN of both parties must be active
• The taxpayer must add the CA through the “My CA” service on the portal
• The CA must have an active, registered Digital Signature Certificate (DSC)
• The taxpayer must have applied for registration or already be registered as a charitable or religious trust or institution under Section 12A by filing Form 10A, which activates the option to file Form 10B in their e-filing account.

Step-by-Step Guide to Filing Form 10B

Timeline and Due Date for Filing

Form 10B must be submitted one month before the income tax return due date under Section 139(1). Generally, this is 30th September of the assessment year. For example, for FY 2024-25, the due date is 30th September 2025. Filing late may lead to penalties and cancellation of tax exemptions.

How to File Form 10B Online via the Income Tax Portal

1. Log in to the income tax e-filing portal
2. Go to the “e-File” section and select “Income Tax Forms”
3. Choose “Form 10B” from the dropdown
4. Fill in the required details, upload audit report, and submit it using a valid digital signature
5. Keep an acknowledgement for future reference

Details Required in Form 10B

General Information About the Organization

You’ll need to provide basic details like:

• Name and PAN of the organization
• Registration number under Section 12A/12AB
• Assessment year and financial year

Details of Income, Application, and Accumulation

The form requires:

• Details of voluntary contributions received
• Expenses related to charitable or religious activities
• Accumulated income and reasons for accumulation (if any)

Audit Observations and Certification

The auditor gives a declaration stating whether:

• The books are maintained properly
• The income has been applied according to the rules
• There are any irregularities or violations

Consequences of Non-Filing or Delay in Filing Form 10B

Loss of Tax Exemptions

If Form 10B is not submitted within the prescribed timeline, the Income Tax Department may deny tax exemptions under Sections 11 and 12 or Section 10(23C). The entire income of the trust or institution may then be subject to tax at applicable rates.

Penalties and Late Fee Implications

As per Section 271B of the Income Tax Act, if a trust or institution fails to get its accounts audited when required, a penalty of 0.5% of the total turnover or gross receipts, subject to a maximum of ₹1,50,000, may be levied. Though Form 10B filing is under Section 12A(1)(b) and Section 10(23C), and there is no automatic penalty just for late submission, missing the audit requirement can invite this penalty along with the larger risk of losing tax exemptions.

Recent Changes and Updates Related to Form 10B

CBDT Notifications and New Rules

Recent changes under the Income-tax (Twenty-ninth Amendment) Rules, 2023, through Notification No. 7/2023 and further updates from the Central Board of Direct Taxes (CBDT), have brought notable updates to Form 10B income tax reporting:

1. Two Audit Forms Introduced:

Until AY 2022-23, all trusts were required to file only Form 10B to claim exemptions under Sections 11 and 12. From AY 2023-24 onwards:

• Trusts with income exceeding ₹5 crore, or those receiving foreign contributions or earning business income, must now file Form 10B.
• Trusts with income below ₹5 crore, and without any foreign contributions or business income, are required to file Form 10BB.

2. Expanded Disclosure Requirements:

• The revised Form 10B now asks for additional details, such as:
• Registration details under Sections 12A or 12AB
• Application and accumulation of income
• Sources and application of donations and contributions
• Investments made under Section 11(5)
• Compliance with restrictions under Section 13
• TDS reconciliation with Form 26AS

3. New Filing Deadline:

The due date for submitting Form 10B has been revised to one month before the due date for filing ITR-7. For AY 2025-26, this means the form must be submitted by 31st August 2025.

4. Stronger Auditor Verification Requirements:

Auditors now need to verify multiple aspects of tax compliance more rigorously. This increases the responsibility of both the management of trusts and the auditors, highlighting the importance of maintaining accurate and detailed financial records.

Best Practices for Filing Form 10B

Maintaining Proper Financial Records

Keep clean, well-documented records of all income, expenses, and donations. Having audited statements ready helps in smoother filing. This also aligns with financial compliance, just like companies offering stock market advisory services maintain audit trails.

Timely Filing to Avoid Compliance Issues

Filing early avoids last-minute errors and delays. It also helps you correct any issues in advance. Delays may lead to questions on your financial transparency and disrupt future planning.

Conclusion

Importance of Accurate and Timely Filing of Form 10B

Filing the Form 10B income tax report plays an important role in maintaining an institution’s credibility and securing tax benefits. For charitable trusts, religious organisations, and Section 8 companies, accuracy and timely submission reflect transparency and good governance. Just as using a share market advisory helps investors make informed choices, staying consistent with tax compliance builds long-term financial clarity and public trust for the organisation.

FAQs

1. Is Form 10B mandatory for all trusts?

No, it is mandatory only if the total income before claiming exemptions under Sections 11 and 12 crosses the basic exemption limit.

2. What is the penalty for late filing of Form 10B?

A penalty of up to ₹1.5 lakh may be imposed under Section 271B if the form is not filed on time. 

3. Can Form 10B be revised after submission?

Currently, there is no option to revise Form 10B once submitted. It is important to check and confirm all details before filing. Understanding what is income tax and staying updated with compliance requirements can help avoid such errors.

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