The Central Board of Direct Taxes ( CBDT ) has issued Circular No. 02/2024 dated March 05, 2024, providing relief to trusts and institutions that submitted incorrect audit reports for the Assessment Year (A.Y.) 2023-24.
The Trusts/institutions that submitted Form No. 10B where Form No. 10BB was required, and vice versa which have furnished on or before October 31, 2023 , can now rectify their submissions by March 31, 2024.
Under the Income-tax Act, 1961, certain trusts and institutions are eligible for tax exemption subject to specific conditions. One such condition pertains to the submission of audit reports in the prescribed format before the specified date.
Previously, Rule 16CC and 17B of the Income-tax Rules, 1962, prescribed Form No. 10BB for trusts/institutions under the first regime and Form No. 10B for those under the second regime. However, with the amendment effective from April 01, 2023, new forms, Form No. 10B/Form No. 10BB, were introduced for assessment year 2023-24 onwards.
For A.Y. 2023-24, it has been observed that many trusts/institutions mistakenly submitted audit reports in the incorrect form, leading to potential denial of exemption. In response to this issue, the CBDT has provided a window for rectification.
The circular stated that “… the Central Board of Direct Taxes, in exercise of its powers under section 119 of the Act hereby allows those trusts/institutions which have furnished audit report on or before October 31, 2023 in Form No. 10B where Form No. 10BB was applicable and vice-versa, to furnish the audit report under 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 of the Income-tax Act, 1961, in the applicable Form No. 10B/10BB for the assessment year 2023-24, on or before March 31, 2024.”
Form 10B & 10BB
Although Form 10B and 10BB may seem similar at first glance, they actually have distinct differences. Here’s a breakdown of the variances between Form 10B and Form 10BB as outlined in the Income Tax Act.
Form 10B is tailored for charitable trusts and institutions predominantly engaged in philanthropic endeavours seeking tax exemptions. These organisations typically focus on activities such as providing education, medical relief, poverty alleviation, or similar charitable initiatives. The form mandates detailed disclosures regarding the organization’s financial statements, activities, and adherence to relevant provisions of the Income Tax Act, 1961.
On the other hand, Form 10BB serves institutions engaged in religious or non-charitable activities eligible for tax exemptions under specific sections of the Income Tax Act. This form delves into gathering information pertinent to the institution’s religious, cultural, or other non-charitable undertakings.
Organisations operating places of worship, cultural centers, or conducting religious ceremonies typically find Form 10BB applicable. It serves as the designated form for cases not covered by the conditions specified for Form No. 10B.
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