Exploring the New Form 10B and 10BB for A.Y 2023-24 Onwards

Introduction

Every year, the Indian government introduces changes and updates in the income tax filing process to ensure better compliance and transparency. One such notable change for the Assessment Year (A.Y) 2023-24 onwards is the revamped Form 10B and the introduction of Form 10BB. These forms are essential for specific categories of taxpayers, particularly for those who claim tax exemptions under various sections. In this article, we will get the in depth understanding of the new Form 10B and 10BB, discussing their purpose, requirements, key changes, and filling procedure.

Form 10B: An Overview

Form 10B is a critical document for charitable or religious trusts, educational institutions, and other organizations that seek tax exemptions under Section 11 and Section 10(23C) of the Income Tax Act, 1961. These sections pertain to institutions or funds that are involved in activities such as education, medical relief, and religious worship, and are exempt from paying income tax.

The primary purpose of Form 10B is to provide detailed information about the income and expenditure of such organizations to ensure that they meet the criteria for tax exemption. It serves as a tool for the Income Tax Department to verify whether the organization is genuinely engaged in the activities for which the exemption is claimed and whether the funds are utilized for the stated objectives.

Form 10B has been updated for A.Y 2023-24 onwards to make the process more transparent and efficient. Let’s explore the key changes in the new Form 10B.

Key Changes in the New Form 10B

1. Revised Format: The new Form 10B has been redesigned with a more user-friendly format. It incorporates clear and concise sections, making it easier for organizations to provide the required information.
2. Mandatory Digital Filing: One of the significant changes is that Form 10B must now be filed electronically. The electronic filing of the form ensures quicker processing and reduces the scope for errors.
3. Detailed Information: The new form requires organizations to provide comprehensive details of their activities, including project-wise income and expenditure. This level of granularity helps in a better understanding of how the organization is utilizing its funds for the specified purposes.
4. Independent Verification: The organization must now obtain an independent audit report along with the Form 10B. This audit report should be furnished in the revised format as prescribed by the Income Tax Department. The independent audit report plays a vital role in validating the information provided in the form.
5. Compliance with Accounting Standards: Organizations are required to comply with the Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) while preparing their financial statements. This ensures uniformity and transparency in the financial reporting of such organizations.
6. Specific Sections for Educational Institutions: For educational institutions seeking tax exemption under Section 10(23C) of the Income Tax Act, the new Form 10B has dedicated sections to provide details about their infrastructure, student facilities, and faculty qualifications.
7. Transparency in Donations: In case the organization receives any foreign contributions, it must disclose details of such contributions in the form. This aligns with the government’s efforts to monitor foreign funding of charitable and religious organizations more closely.

Filling procedure of new form 10B: –

1. First of all auditee has to visit to the Income Tax Portal and log in to his account. Add a CA for filling form10B or if already added then assign him the form 10B.

2. Now CA will log in to the Income Tax Portal by using his user id and password and then CA after reviewing the details will either accept or reject the auditee’s request for filling 10B. Once he accepted the request now, he has to upload the JSON file of Form 10B along with some other details.

3. How to download and fill the new utility for form 10B (A.Y 2023-24 onwards)

4. Once you have done with filling the complete utility thereafter you have to preview and download the JSON file for the same.
5. Once CA has uploaded the JSON file of form 10B, the auditee will receive a confirmation request on his portal. So, for that Auditee will again log in to Income Tax Portal and can give the confirmation to the form 10B filled by CA.

Form 10BB: Introduction and Purpose

Alongside the updated Form 10B, the Income Tax Department has introduced a new form, Form 10BB. This form is specifically designed for assessing the genuineness of donations claimed as deductions under Section 80G of the Income Tax Act. Section 80G allows taxpayers to claim deductions for donations made to eligible charitable organizations. To ensure that taxpayers are rightfully claiming these deductions, Form 10BB has been introduced.

Form 10BB primarily serves the following purposes:

1. Verification of the Donee: The form requires the donee organization (the one receiving the donation) to provide detailed information about itself, including its registration under Section 12A or 12AA and its PAN (Permanent Account Number).

2. Validation of the Donation: The donor must verify the donation by providing particulars such as the name of the donee, the amount donated, and the mode of payment. This helps in cross-verification by the Income Tax Department.

3. Compliance with Section 80G: Donors claiming deductions under Section 80G need to ensure that their donations comply with the section’s provisions. Form 10BB ensures that the donation meets the criteria for claiming deductions.

Key Changes in the New Form 10BB

The introduction of Form 10BB for A.Y 2023-24 onwards marks a significant step toward improving transparency and accountability in claiming deductions under Section 80G. Here are some key changes in the new Form 10BB:

1. Digital Filing: Just like Form 10B, Form 10BB must be filed electronically, making the process more streamlined and efficient.

2. Detailed Information: The form requires comprehensive details about the donee organization, including its name, address, and registration details under Section 12A or 12AA. This information is vital in validating the authenticity of the donee.

3. Validation of Donations: The form requires the donor to provide specific details of the donation, such as the name of the donee, the amount donated, and the mode of payment. This information can be cross verified with the records of the donee organization.

4. Deemed Approval: If the donee organization is registered under Section 80G, the donation is considered valid unless it is specifically denied by the Income Tax Department. This provision eases the process for genuine donors and organizations.

5. Scope for Verification: In cases where there is any doubt or need for further verification, the Income Tax Department can seek additional information or clarification from the donor or the donee organization.

Filling Procedure of Form 10BB

All the steps will be same as above (for 10B), just the name of the form will change from 10B to 10BB wherever necessary. Like for example auditee can download the utility in the same manner as we have shown above for the form 10B, and auditee can also file the same by following above procedure.

Summary of the changes made in the Form10B and 10BB: –

10B and 10BB previously (i.e., up to A.Y 2022-23)

• Up to A.Y. 2022-23, Audit Report in Form 10B was required to be furnished by Charitable or Religious Institutions registered under section 12AB of Income Tax Act, 1961.
• Form 10BB was required to be furnished under by funds, trusts and institutions registered under different clauses of section 10(23C) of Income Tax Act, 1961.

10B and 10BB now (i.e., A.Y 2023-24 onwards)

Conclusion

The introduction of the revamped Form 10B and the new Form 10BB for A.Y 2023-24 onwards is a significant step toward enhancing transparency and accountability in the Indian income tax system. These forms play a vital role in ensuring that organizations claiming tax exemptions are genuinely involved in the specified activities and that donations made for charitable purposes meet the required criteria.

The digital filing requirement, detailed information, and the emphasis on compliance with accounting standards and audit reports in Form 10B contribute to a more thorough assessment of organizations seeking tax exemptions. On the other hand, Form 10BB helps in validating deductions claimed under Section 80G, ensuring that taxpayers are supporting legitimate charitable causes.

Taxpayers, as well as organizations seeking tax exemptions and those receiving donations, should familiarize themselves with the new forms and their requirements to ensure a smooth and compliant tax filing process. These forms reflect the government’s commitment to promoting transparency and accountability in the taxation system, and their proper utilization will go a long way in supporting genuine charitable and educational endeavours while curbing misuse of tax benefits.