Finally, some relaxation to Charitable Organisations under Income Tax; ITR-7, 10B & 10BB for AY 23-24 deadline extended, much ahead of time

[Vivek Jalan]

Income Tax Compliance for Charitable Organisations have been completely overhauled since the last few years. It all started with new online registrations for all charitable Organisations and requirement of renewal of registrations. Every budget has seen upheavals in the norms related to trusts. The Hon’ble Apex Court also added to the bandwagon by declaring specific incomes which may or may not be exempt in the case of trusts in the back-to-back judgements 2nd half of 2022, in the case of Ahmedabad Urban Development Authority and New Noble Education Society. In view of the significant amendments made to the taxation of trusts over the past few years, revised audit report in Form No. 10B and Form No. 10BB have been notified vide Notification No. 7 of 2023 dated 21.02.2023. Form No.10B and Form No. 10BB requires the auditor to bifurcate certain payments or application in electronic modes and non-electronic modes. Various other amendments were introduced in the new Forms 10B and 10BB, significantly altering the requirements for reporting. These changes affect all trusts, irrespective of their income. Form 10B now contains 49 clauses and 29 schedules, while Form 10BB has 32 clauses and 6 schedules. Moreover, ITR-7 has been modified to include new schedules, demanding historical data and detailed breakdowns. The introduction of these forms was making life difficult for these organisations as well as consultants and auditors, particularly for NGOs without dedicated resources. One major challenge stemmed from the non-availability of utility for Forms 10B and 10BB. Although the utility for Form 10B had been released online, Form 10BB’s offline utility remained unavailable. This posed a significant hurdle, as forms had to be filled manually. With limited time available, the trusts and NGOs faced a daunting task. Furthermore, Form 10BB could only be filed online, which was impractical for handling substantial data.

Not very many date extensions under Income Tax Forms filing deadlines happen much before the last day. However, in case of trusts and charitable institutions, the CBDT has been more thoughtful and with around two weeks in hand, announced Vide Circular No. 16/2023 dated September 18, 2023, invoking Section 119, an extension in the deadline for filing Form 10B/10BB and ITR-7 till October 31, 2023, and November 30th, 2023, respectively. Delay in compliance in filing the ITR and Audit reports of trusts and charitable institutions could have severe consequences, including the disallowance of exemptions under section 11. Hence representations were made by various organisations and the CBDT relented.