CBDT clarification regarding submission of audit reports by trusts and institutions

Central Board of Direct Taxes issued an advisory under Section 119 of the Income-tax Act, 1961, addressing a common issue related to the submission of audit reports by trusts and institutions. Trusts, institutions, universities, hospitals, and other entities falling under specific clauses of Section 10 or registered under Section 12AA or Section 12AB of the Act are eligible for income tax exemption, subject to certain conditions.

One such condition pertains to the submission of audit reports by these entities. Clause (b) of the tenth proviso to clause (23C) of Section 10 and sub-clause (ii) of clause (b) of sub-section (1) of Section 12A stipulate that if the total income of a trust or institution exceeds the maximum non-taxable amount in any previous year, it must get its accounts audited and furnish the audit report in the prescribed form before the specified date.

The prescribed forms for audit reports are outlined in Rule 16CC and 17B of the Income-tax Rules, 1962. These rules specify Form No. 10B for certain conditions and Form No. 10BB for others. However, recent amendments introduced new forms, Form No. 10B and Form No. 10BB, effective from the assessment year 2023-24 onwards.

Despite the clear guidelines, the Board noticed instances where trusts and institutions submitted audit reports using the incorrect form for the assessment year 2023-24. This discrepancy could potentially lead to the denial of exemption, as non-compliance with prescribed forms is a crucial condition for claiming exemption.

To address this issue and provide relief to affected entities, the Central Board of Direct Taxes, exercising its powers under Section 119 of the Act, has allowed trusts and institutions to rectify their submissions. Entities that submitted audit reports using the incorrect form—Form No. 10B instead of Form No. 10BB, or vice versa—for the assessment year 2023-24 can now furnish the correct audit report by 31st March, 2024.

This extension provides a crucial opportunity for affected entities to rectify their compliance errors and ensure eligibility for tax exemption. It underscores the importance of adhering to regulatory requirements and staying abreast of changes in taxation laws and procedures.