IT Portal urges filing of Audit Report in correct prescribed form on or before 31st March 2024

The Income Tax Department has urged taxpayers to file audit reports in the correct prescribed form on or before 31st March 2024. Tax Department on their E-filing Portal has issued an update regarding the same.

The Update Read as follows:

Attention Trusts/ Institutions

Income of any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or subclause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 (hereinafter referred to as trust or institution under the first regime) of the Income-tax Act, 1961 (hereinafter referred to as the Act) or any trust or institution registered under section 12AA or section 12AB of the Act (hereinafter referred to as trust or institution under the second regime) is exempt subject to fulfilment of certain conditions specified under various sections of the Act.

Clause (b) of the tenth proviso to clause (23C) of section 10 of the Act specifies one of the requirements that the trust or institution must meet in order to be eligible to claim an exemption under the first regime.

This states that if the total income of the trust or institution, as computed under the Act without regard to the provisions of exemption under the first regime, exceeds the maximum amount not chargeable to income tax in any previous year, the trust or institution must have its accounts audited and furnish the audit report in the prescribed Form by the specified date.

A same condition applies to trusts or institutions under the second regime, as outlined in subclause (ii) of clause (b) of sub-section (1) of Section 12A of the Act.

Rule 16CC and 17B of the Income-tax Rules, 1962 (hereinafter referred to as the Rules) prescribe the form of an audit report for trust or institution under the first and second regime respectively. They provide that the report of audit of the accounts of a trust or institution shall be furnished in –

(a) Form No. 10B where,

(i) the total income of trust or institution, exceeds rupees five crores during the previous year; or

(ii) such trust or institution has received any foreign contribution during the previous year; or

(iii)such trust or institution has applied any part of its income outside India during the previous year;

(b) Form No. 10BB in other cases.

The new forms, Form No. l0B/ Form No. 10BB were announced in Notification No. 7 of 2023, dated February 21, 2023. The aforementioned prescription became effective on April 1, 2023, pursuant to the Income-tax (Third Amendment) Rules, 2023, and is thus applicable to the assessment year 2023-24 and subsequent years. The due date for submitting such audit reports for the financial year 2023-24 was October 31, 2023.

It has come to the Board’s attention that in a number of situations, trusts/institutions have supplied audit reports in Form No. 10B when Form No. 10BB was required for the financial year 2023-24. Similarly, in a number of cases, trusts/institutions provided audit reports in Form 10BB, although Form 10B was required for the financial year 2023-24.

As noted above, non-furnishing of audit report in the prescribed form would result in denial of exemption in such cases as it is one of the conditions which is required to be satisfied for claim of exemption.

In view of the above, the Central Board of Direct Taxes, in exercise of its powers under section 119 of the Act has allowed those trusts/ institutions which have furnished audit report on or before 31st October, 2023 in Form No. 10B where Form No. 10BB was applicable and vice-versa, to furnish the audit report under clause (b) of the tenth proviso to clause (23C) of section 10 and sub-clause (ii) of clause (b) of sub-section (1) of section 12A of the Income-tax Act, 1961, in the applicable Form No. l0B/ 10BB for the assessment year 2023-24, on or before 31st March, 2024. Please refer to CBDT Circular 2/2024 dated: 05th March 2024.

Please furnish audit report in correct prescribed form for AY 2023-24 on or before 31st March 2024 to claim exemption.

For Official Circular Download PDF Given Below: