CBDT Circular No. 2/2024 dated 5 March 2024: Time Extension for Trusts or Institutions to rectify Audit reports of AY 2023-24 on or before 31 March 2024 by using correct form 10B/10BB as prescribed.
Listen the Circular:
For funds, institutions, trusts, universities, educational institutions, hospitals, and medical institutions falling under certain clauses of section 10 of the Income-tax Act, 1961, or registered under section 12AA or section 12AB, tax exemption is provided subject to meeting specific conditions outlined in the Act.
One crucial condition, as per the tenth proviso to clause (23C) of section 10, is that if the total income of a trust or institution exceeds the non-taxable limit in any previous year, they must get their accounts audited and submit the audit report in the prescribed Form before the specified date. A similar condition applies to trusts or institutions under the second regime as well, as per sub-clause (ii) of clause (b) of sub-section (1) of section 12A.
The prescribed forms for audit reports for these trusts or institutions are governed by Rule 16CC and 17B of the Income-tax Rules, 1962. These rules state that the audit report must be furnished in either Form No. 10B or Form No. 10BB, depending on certain criteria such as total income, receipt of foreign contribution, or application of income outside India.
The new forms, Form No. 10B and Form No. 10BB, were introduced via Notification No. 7 of 2023 dated 21st February, 2023. These forms became effective from 01.04.2023, applicable for assessment year 2023-24 onwards. The deadline for furnishing these audit reports for A.Y. 2023-24 was 31st October, 2023.
Previously, the prescribed forms were Form No. 10BB for trusts or institutions under the first regime and Form No. 10B for those under the second regime. The changes in forms took effect for the first time in A.Y. 2023-24.
However, it has been observed that many trusts or institutions mistakenly filed Form No. 10B when Form No. 10BB was required, and vice versa, for A.Y. 2023-24. This mistake could lead to denial of tax exemption as it is a crucial condition.
To address this, the Central Board of Direct Taxes, under its powers from section 119 of the Act, allows trusts or institutions to rectify their mistake. Those who filed Form No. 10B when Form No. 10BB was needed, and vice versa, can now submit the correct audit report in the applicable Form No. 10B or 10BB for A.Y. 2023-24 by 31st March, 2024.
This move ensures that trusts or institutions do not lose out on tax exemption due to a procedural error in filing the audit report.
For any questions or assistance in complying with this order, trusts and institutions can reach out to their tax advisors or refer the official guidelines provided by the Central Board of Direct Taxes.
To Download the CBDT Circular 2/2024 CLICK HERE
To access the Income Tax E-Verification Scheme 2021 CLICK HERE
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