Indore (Madhya Pradesh): The income tax department has been keeping a close watch on charitable institutions for the past few years to stop people from claiming false rebates in their taxes.
Now, new provisions of income tax have put restrictions on the misuse of charitable institutions. From this year, charitable institutions will have to compulsorily file audit reports in Form 10B and 10BB to claim exemption. Form 10B of about 18 pages is not only very long but also very difficult.
Earlier, Form 10B was only 2 pages and was very simple, said expert tax consultants at a seminar, which was organised by Tax Practitioners Association (TPA) and CA Indore Branch.
Keynote speaker chartered accountant Manoj Phadnis, a past national president of ICAI, said that an institution or trust registered under section 12-A or 10(23C) is required to file an audit report in Form 10B under certain conditions. The conditions are if total income is Rs 5 cr or more in the financial year, if they have received foreign contribution (Form 10B will have to be filed in case of foreign contribution, even if they are not registered under 12-A or 10(23C) and if the institution has spent any part of the income outside the country.
He said that it is necessary to upload these forms on the income tax portal before September 30.
Phadnis said that the taxpayer is required to provide some information, like main business activities of the institution, the total revenue and amount spent during the year for carrying out the object of the Trust and if the income is used for purposes other than the purpose of the trust, details of such use should be furnished.
SN Goyal, who was moderating the seminar, said that these audit reports are not only difficult but they should be filled with proper care. A little carelessness can lead to facing income tax notices. He said that this step by the income tax department will stop fake institutions which are evading tax by claiming wrong exemptions.
Along with this, the institutions will have to verify their books of accounts.
On this occasion, a large number of members including advocate Govind Goyal, Vikram Gupte, Pranay Goyal, GP Saraf, Vijay Bansal, Chinmay Sheth, Mayank Sharma and Rajesh Joshi were present.
