Tax Association requests for Deferment of Form 10B and Form 10BB by 1 Year

The All Gujarat Federation of Tax Consultants and Income Tax Bar Association has made representation before Nirmala Sitharaman for Deferment of Form 10B and Form 10BB by 1 Year.

The Income Tax Bar Association (ITBA) is established in 1947 with an aim to represent issues of tax co11sultants and increase awareness among taxpayers. The Income Tax Bar Association is one of the oldest and active bar association in India. It regularly organizes Conferences, Study Circle Meetings, Two Day Tax Conclave so on & so forth for the benefit of the members. It has a membership strength of more than 1200 Tax Advocates, Chartered Accountants, and Tax Practitioners.

The All-Gujarat Federation of Tax Consultants (AGFTC) founded in 1992, is the first and only Apex Regional Body of Advocates, Chartered Accountants and Tax Practitioners / Tax Professionals of Gujarat, having membership strength of 1500 professional and institutional membership of 37 local bar associations fro1n all the District of Gujarat.

The prime object of the association and federation is not only to work for the cause of the professionals but also educate the public at large. We act as a Catalyst between citizen and Government authorities. We regularly organize Seminars, Webinars, Tax Conclave and Lecture on legal awareness in mofussil areas across the Gujarat. The Two-Day Tax Conclave is the landmark event of the Association which has become an annual bookmark for the tax professionals in the state of Gujarat.

We respectfully submit that in recent past the amendments made in the areas of Taxation of Charitable Trusts have created a lot of implementation difficulties for many of the Charitable Trusts and Non-profitable Organizations. Charitable trusts carry on philanthropic activities and bridge the gap, supplementing the efforts of the government to reach out to and uplift every needy citizen. The day to day activities of most of the trusts are managed by trustees with the help of administrative staff. The staff is not professionally qualified. Many times, the trust does not have full-time employees and carries out its activities with the help of volunteers. It may be appreciated that Trusts/ NGOs are part of the nation-building process and everyone has witnessed that such trusts and NGOs have played a key role in the educational sector, medical sector, social the upliftment and development of society at large.

Presently the trusts and non-profitable organizations are facing great difficulty in relation to compliance in filing various newly prescribed forms under the Act. For the assessment year 2023-24, the trusts are required to obtain audit reports in Form No. 10B and Form 10BB from auditors and get the same filed by 30th September 2023. The trusts are also required to file Form No. 9A and Form No. 10 for which the original due date, was 31st August and has been now extended to 31st October 2023 vide Circular No. 6 of 2023 dated 24-5-2023. Similarly, the Income-tax Return in ITR-7 is required to be filed by 31st October 2023.

New Forms 10B and 10BB were introduced vide Notification No. 7/2023 dated February 21, 2023. Form 10B is to be filed then,

(i) the total income of such eligible trust, without giving effect to the provisions of sections 10(23C), section 11 and 12 of the Act, exceeds rupees five crores during the previous year; or

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

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

In other cases, the audit report will be in Form 10BB.

The forms notified now are completely different from the old forms and have substantially amended the contents of the Forms. The newly prescribed forms require many additional details to be certified by the Chartered Accountant. The details are exhaustive and cumbersome to prepare. These forms are on the lines of Form 3CD, which applies to business entities with a turnover in excess of Rs.10 crore.

The total number of clauses and schedules in the present forms are tabulated as under:

Further, the Income Tax Return Form -ITR 7 has also been amended to include new schedules which require the Trusts/ NGOs to give details of the last four to five assessment years. The details along with various bifurcations and compilation of voluminous details are required as per the new ITR-7. The ITR-7 prescribed requires maintaining contemporary data which is not possible and feasible, and this requires revisiting of the entire data and the transactions for the purpose of collating the same. The Trusts/ NGOs mostly are benevolent in nature and generally do not have means & infrastructure to comply with such compliances. In most of the cases, the staff engaged by the Trusts/ NGOs are honorary staff and not full-time professional accountants, who are competent enough to understand various clauses as amended in the new Forms 10B or 10BB & ITR-7. The Trust/NGOs further have limitations of resources which adds to the difficulty in compiling the details.

The delay in filing of the above-mentioned Forms / ITR can lead to severe irreversible consequences including complete disallowance of exemption u/s. 11 and the levy of tax according to Section 115BBI and consequently, Trust/ NGO has to face huge tax den1ands which lead to great financial losses to trusts and increase the overall litigations. This will lead to great difficulty to the Trusts/ NGOs and may eventually lead to unintentional drain on the resources of the trusts. The consequences of not filling/ delay in filling in relation to the Trusts /NGOs are very harsh and causing great practical difficulties. The compilation of the details required in the terms is practically impossible and filling of the forms in such short time would lead to either mistakes in filling or incorrect submissions. The consequences of either of them are also far-reaching.

In order for trusts and NGOs to file the correct details in the said forms, a lot of awareness is required. To create such awareness, time is required. Moreover, the dates coincide with the other due dates of the income tax, like the filing of the income tax audit, the filing of the TDS return, etc. Hence, sufficient time should be accorded to the trusts in order to create adequate awareness regarding the forms, the details required by the forms, and how such details should be collected and maintained by the trusts.

Non-availability of utility for the Forms and consequent challenges

Whereas the utility for the new Form 10B and Form 10BB for A.Y. 2023-24 has been released on the website of the Income Tax Portal in the first week of September 2023, the offline utility for the new Form 10BB for A.Y. 2023-24 has not yet been released. Even the assignment of the new Fonn 10BB to a Chartered Accountant has been activated on September 6, 2023. This further adds to the difficulty, as the chartered accountant, will have to spend significant time filling up the details in the utility. The trusts and NGOs now will have very little time, and it will become almost impossible for the trusts and NGOs to fill out the audit forms and return of income in such a short period of time. Form 10BB is available only for online filing, which is actually very burdensome considering the quantum of data called for. The third­party approved vendors whose software is commonly used for the preparation of forms and reports have not, as of date, updated the utility since it is an online filing. Form 10BB is only available on the portal as of now, which is practically very difficult.

Request

The above difficulties require your immediate attention, and we therefore humbly request Your Honour to kindly defer the applicability of the new Form 10B and Form 10BB by one year and make them applicable with effect from assessment year 2024-25. We request that you appreciate that the maintenance of records to comply with the new forms in an effective matter requires a lot of awareness through various public forums, and the same is not possible within the available time.

We plead that a lenient view should be taken towards the trusts and NGO’s that work towards the welfare of society without any profit intent. The resources available to them are not similar to those of commercial organizations.

For Official Representation Download PDF Given Below: