Form 10BB

What is Form 10BB?

Form 10BB is an audit report that must be filed by charitable trusts, educational institutions, and non-profit hospitals or medical institutions. These organisations can claim tax exemptions under Section 10(23C) of the Income Tax Act if they meet the stipulated conditions. The form contains detailed financial information, including income, expenses, assets, and liabilities, and must be audited by a Chartered Accountant (CA).

Filing Form 10BB ensures that the organisation is compliant with the provisions of the Income Tax Act and helps in availing tax exemptions.
 

Importance of Form 10BB

Form 10BB plays a critical role in ensuring transparency and compliance with the Income Tax Act. Here are the key reasons why it is important:

Tax Exemption Claim: The primary purpose of Form 10BB is to allow institutions to claim tax exemptions under Section 10(23C). This helps reduce the tax liability for non-profit organisations.

Financial Transparency: The form ensures that the financial activities of the organisation are properly recorded and used for charitable or educational purposes. It reflects the correct use of income, preventing misuse of tax exemptions.

Audit and Compliance: Form 10BB is an audit report, which must be certified by a CA. This ensures that the organisation’s financial statements comply with the legal requirements of the Income Tax Department.
 

Who is Required to File Form 10BB?

Form 10BB is mandatory for any organisation claiming tax exemptions under Section 10(23C). The following types of organisations must file this form:

Charitable Trusts: These include organisations focused on charity, such as those working in social welfare, education, or healthcare.

Educational Institutions: Non-profit educational institutions, including schools, colleges, and universities, which exist to provide education without a profit motive.

Hospitals and Medical Institutions: Non-profit hospitals and medical institutions, which offer medical services for charitable purposes, must file Form 10BB to avail tax exemptions.
 

What Information is Required in Form 10BB?

Form 10BB consists of three sections:

1. Part A: General Information
This section asks for basic details about the organisation, such as:

• The name and official address of the institution
• PAN (Permanent Account Number)
• Registration number under Section 12A or 12AA (if applicable)
• The assessment year
• The relevant sub-clause under Section 10(23C)

2. Part B: Income Application
This part focuses on how the organisation’s income was utilised:

• Core Activities: A description of the institution’s charitable or educational activities.
• Income and Expenditure: The total income earned during the year and the expenditure incurred to fulfil the institution’s objectives.
• Non-Charitable Use of Funds: If any income was used for purposes other than charitable or educational objectives, this must be disclosed.
• Income Exceeding 15%: If any income source exceeds 15% of the total income, the details need to be provided.
• Application of Income: The form must confirm that at least 85% of the total income has been used for charitable or educational purposes.

3. Part C: Other Information
This section requires additional information such as:

• Investments: Details about the organisation’s investments in funds or assets.
• Income and Expenditure Statement: A summary of the organisation’s financial activities.
• Donations/Transfers: Information on donations or transfers made to other charitable institutions.
• Voluntary Contributions: Any voluntary contributions received in the previous year.
• Anonymous Donations: If any anonymous donations were received, these should be disclosed.
   

How to File Form 10BB Online?

Filing Form 10BB is done through the Income Tax Department’s e-filing portal. Here’s a simple step-by-step guide to filing the form online:

Login to the e-filing Portal: Visit the official Income Tax e-filing website and log in with your user credentials.

Select ‘Income Tax Forms’: From the e-filing tab, select "Income Tax Forms."

Choose Form 10BB: Find and select Form 10BB from the list of available forms.

Fill in the Required Information: Complete the form with accurate details regarding income, expenditure, and other relevant financial information.

Attach Supporting Documents: Ensure that documents such as the balance sheet and income statement are attached.

Assign to a Chartered Accountant: Once the form is filled, assign it to a CA for review and submission.

CA Uploads the Form: The CA will log in to verify the details and submit the form. After submission, the organisation must accept it through the “For Your Action” section.

Due Date for Filing Form 10BB

The deadline for filing Form 10BB typically coincides with the due date for filing Income Tax Returns (ITR). Generally, the due date is 30th September. However, organisations should always confirm the exact deadline each year, as it may change due to notifications or extensions by the government.

Consequences of Non-Compliance

Failure to file Form 10BB on time can lead to serious consequences for the organisation, including:

Loss of Tax Exemption: If Form 10BB is not filed, the organisation will lose its tax-exempt status under Section 10(23C), making it liable for taxes on its income.

Penalties and Fines: Late filing or incorrect filing of Form 10BB can attract penalties from the Income Tax Department.

Damage to Reputation: Non-compliance can harm the credibility of the organisation, reducing trust among donors and stakeholders.

Increased Scrutiny: Non-compliant organisations may face greater scrutiny from the tax authorities, which can lead to audits or investigations.
 

Conclusion

Form 10BB is an essential document for charitable, educational, and medical institutions wishing to claim tax exemptions under Section 10(23C) of the Income Tax Act. By ensuring proper filing and compliance, these institutions can maintain their tax-exempt status and avoid penalties.

Organisations must ensure they complete Form 10BB accurately and on time to preserve their tax benefits. With the help of a Chartered Accountant and proper record-keeping, the filing process can be seamless and straightforward. Staying compliant with Form 10BB filing requirements not only ensures legal adherence but also strengthens the credibility and trustworthiness of the institution.