CBDT Circular No17/2023: Clarity on Detailing Substantial Contributors in Form 10B & 10BB by Charitable & Religious Entities

CBDT Circular No. 17/2023

In a recent development, the Central Board of Direct Taxes (CBDT) released Circular No.17/2023 on 9th October 2023, bringing important clarifications on compliance obligations for charitable and religious entities in respect of filing their audit report under the Income Tax Act 1961. This directive, issued under section 119 of the Income Tax Act, grants the CBDT authority to provide instructions to lower levels of tax authorities, streamlining the compliance process for the Income Tax Department.

The circular focuses on some clarity on the mandatory submission of audit reports in Form-10B and Form-10BB for various charitable and religious entities falling under specific provisions of the Income Tax Act. Form-10B and Form-10BB were introduced through CBDT Notification No. 7/2023 on 21st February 2023, revolutionizing the audit reporting system for Charitable and religious organizations.

Following the introduction of these new forms, the CBDT received representations outlining challenges in detailing individuals making “substantial contributions” to trusts or institutions, particularly in row no. 41 and 28 of the Annexures to Form-10B and Form-10BB, respectively. In response, the CBDT issued the following clarifications vide its circular no. 17/2023 to address these concerns:

(a) Details should be provided for individuals whose contributions exceed 50 thousand rupees in the relevant previous year.

(b) Information about the relatives of such contributors, should also be included, if available.

(c) Additionally, details regarding concerns in which the substantial contributors have a vested interest should be provided, if available.

Clarifying the Applicability of Form-10B & Form-10BB

Form no. 10B Applicability

Form 10B primarily caters to charitable trusts and institutions engaged in philanthropic activities seeking tax exemptions. Entities eligible for Form 10B are usually involved in educational, medical, poverty alleviation, or similar charitable activities. This form is mandatory under the following conditions:

 

i. The organization’s total income exceeds rupees 5 Crores during the previous year.

ii. The entity has received foreign contributions in the previous year.

iii. Any part of the entity’s income has been applied outside India in the previous year.

Form no. 10BB Applicability

Form 10BB is designed for institutions engaged in religious or non-charitable activities eligible for tax exemptions under specific sections of the Income Tax Act. Organizations operating places of worship, cultural centers, or conducting religious ceremonies can utilize Form 10BB for compliance. This form should be used in cases not covered by the conditions specified for Form No. 10B.

For more detailed information, refer to CBDT Circular No.17/2023 and CBDT Notification No. 7/2023.

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