The realm of income tax for charitable and religious institutions has seen significant changes with the Finance Act of 2020, impacting how these entities manage compliance and registration. Notably, the revamp of registration processes through Forms 10A and 10B marks a shift towards more streamlined, electronic procedures. This guide provides a comprehensive overview for income tax consultants and entities looking to navigate these changes effectively

Introduction to Form 10A and Its Importance

Form 10A is essential for charitable or religious trusts seeking to register under Section 12A of the Income Tax Act. This registration is crucial as it provides these entities with tax exemption benefits. The process for filing Form 10A has been moved entirely online, aligning with the digital India initiative, which simplifies the procedure and makes it more accessible

Key Steps to File Form 10A

1. Access the E-filing Portal: Begin by visiting the official Income Tax Department’s E-filing portal.
2. Navigate to E-file Menu: Select 'Income Tax Forms' from the E-file menu on the upper-left corner of the page.
3. Select the Form and Assessment Year: Choose 'Form 10A' from the drop-down menu and the relevant assessment year.
4. Submission Mode: Opt for 'Prepare and submit online' and proceed by clicking 'Continue'.
5. Complete the Submission: Read the instructions carefully, attach the necessary documents, and submit the form.

Documents Required

1. Self-certified copy of the trust deed or establishment document
2. Registration proof with appropriate authorities (like Registrar of Companies).
3. Past financial statements (if applicable).
4. Details of activities and modifications in objectives (if any)

The process has been designed to be user-friendly, ensuring that even those with minimal technical expertise can comply without the need for extensive Income Tax Consultancy services. However, the guidance of skilled income tax consultants can greatly ease the process, ensuring accuracy and compliance with all regulatory requirements.

Form 10B: Audit Report Filing by Charitable Trusts

Once a trust is registered using Form 10A, Form 10B comes into play for filing audit reports. This form is accessible to the Chartered Accountant (CA) designated by the trust through the e-Filing portal

Filing Process for Form 10B

1. CA Login: The CA logs in using valid credentials.
2. Access Assigned Forms: Navigate to 'Pending Actions' to view and accept assigned forms.
3. Form Verification and Submission: After accepting the form, the CA verifies details, completes necessary fields, previews, and finally submits the form through e-verification

This form is integral for maintaining transparency and accountability in the financial operations of the trust, making it a critical component of compliance

Due Date Extensions for Form 10 A /10B and Their Impact

CBDT has issued a Circular extending the due date for filing Form 10A (i.e. application form for provisional 12A/80G registration) & Form 10AB (i.e. application form for final 12A/80G registration)

Circular no. 07/2024 issued on 25.04.2024 further extends the due date for filing Form 10A/ Form 10AB under the Income-tax Act, 1961 (the ‘Act’) upto 30th June, 2024.

The order has been issued following the extensive representations received from taxpayers, tax professionals & our alma matter ICAI.

Further clarifications by CBDT

1. The due date of filing Form 10A/ Form 10AB has been extended for Sections 10(23C), 12A, 80G & section 35 exemptions.

2. Trusts, institutions, or funds that missed the deadline to file Form 10A for the AY 2022-23, and who later registered as new entities and got Form 10AC, can now surrender Form 10AC & reapply as already existing organizations using Form 10A until June 30, 2024.

3. Those trusts, institutions or funds whose applications for re-registration were rejected solely on the grounds of late filing or filing under wrong section code, may also submit fresh application in Form 10AB within the extended deadline of 30th June, 2024.

4. In cases where any trust, institution or fund has already made an application in Form No. 10AB on or before the issuance of this Circular, and where the Commissioner has not passed an order before the issuance of this Circular, the pending application in Form No. 10AB may be treated as a valid application.

5. On reading the clarification, one opinion may also be that if any application was rejected due to delay in filing or missed deadline & the applicant has already filed an appeal against the order, then also the applicant can file a fresh application before 30-6-24.

Conclusion

For Income Tax Consultants specializing in the non-profit sector, staying updated with these changes is crucial. The shift to an entirely electronic registration and filing system for Forms 10A and 10B represents a significant step towards simplifying administrative processes for charitable trusts. By leveraging this guide, income tax consultants can better serve their clients, ensuring that they meet all regulatory requirements efficiently and effectively.

In summary, the streamlined process, essential documentation, and extended deadlines form the crux of effective compliance for charitable organizations under the Income Tax Act. Ensuring familiarity with these processes is indispensable for both income tax consultants and the entities they advise.