Form 10B is a report that needs to be filed by charitable organizations under section 12A(1)(b) of the Income Tax Act, 1961. This form requires the auditor of the charitable organization to provide an audit report of the organization’s accounts and provide an opinion on whether the organization has applied its income and accumulated funds for charitable purposes.

In 2020, the Central Board of Direct Taxes (CBDT) introduced changes to the format of Form 10B. The key changes are as follows:

1. Additional disclosures: The revised Form 10B requires additional disclosures on the activities of the charitable organization, such as the number of beneficiaries, the nature of activities, the funds allocated to specific activities, and the impact of these activities on the beneficiaries.

2. Changes in format: The revised Form 10B has a new format, with a separate section for the auditor’s opinion on whether the organization has applied its income and accumulated funds for charitable purposes. The format also includes separate sections for the auditor’s report on the organization’s financial statements and the notes to the financial statements.

The changes in Form 10B have been introduced to enhance transparency, accountability, and compliance among charitable organizations. The additional disclosures and the new format will help the authorities and the public gain a better understanding of the activities and impact of the charitable organizations.

It is advisable for charitable organizations to seek the assistance of a qualified auditor and ensure compliance with the revised Form 10B. Non-compliance can result in penalties and affect the organization’s eligibility for tax exemptions under section 11 & 12of the Income Tax Act, 1961.

The audit report for charitable organizations in India has undergone some changes in recent years to ensure more transparency, accountability and consistency. The important forms that is used in the audit report of charitable organizationregistered u/s 12A is Form 10B.

Form 10B:

Form 10B is used for audit report of charitable trusts and institutions under section 12A(1)(b) of the Income Tax Act, 1961. The recent changes in Form 10B are as follows:

1. Disclosure of PAN and Aadhaar number: The auditor is required to disclose the Permanent Account Number (PAN) and Aadhaar number of the trustees of the trust or institution being audited in Form 10B.

2. Details of receipts and payments: The auditor needs to provide details of receipts and payments during the financial year under audit. This includes income received from donations, grants, investments, and any other sources, as well as details of expenses incurred.

3. Details of investments: The auditor needs to disclose details of all investments made by the trust or institution, including the nature of the investment, and the amount invested, .

4. Compliance with laws: The auditor needs to state whether the trust or institution has complied with all the laws applicable to it during the financial year under audit, including the Income Tax Act, 1961, and the Foreign Contribution Regulation Act, 2010.

5. Details of loans and advances: The auditor needs to disclose details of all loans and advances given by the trust or institution during the financial year under audit, including the amount, the interest rate, and the terms and conditions.

In summary, the recent changes in Form 10B has increased the level of transparency and accountability for charitable organizations in India. These changes have helped to ensure that charitable organizations are using their funds in a responsible manner and are complying with all the laws applicable to them.

The few common questions pertaining to form 10B : 

Q1) how is form 10B to be dealt with in terms of receipts ? 

The 10B form is used for filing the Audit Report of an organization registered under section 12A of the Income Tax Act 1961.. The new rules and regulations for organizations would primarily pertain to the following:

1. Tax Audit: Under the Income Tax Act, organizations whose gross receipts exceeds the basic exemption limit in a financial year are required to get their accounts audited by a Chartered Accountant and get it filed online by the 30^thSeptember of following year.

2. Filing of Income Tax Return: Charitable organizations whose gross receipts exceeds the basic exemption limit in a financial year are required to file Income Tax Return  in the prescribed form .. The due date for filing the Income TaxReturn is October 31^st of the following year.

3. Compliance with TDS and TCS provisions: Organizations are required to comply with the provisions of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS). This would include deducting TDS on payments made to vendors, deducting TDS on salary payments, collecting TCS on sales, etc. The TDS and TCS returns need to be filed in the prescribed format.

4. Compliance with GST provisions: If the organization is registered under the Goods and Services Tax (GST), they would need to comply with the provisions of GST. This would include filing GST returns, paying GST on time, etc.

5. Compliance with other laws and regulations: Organizations would also need to comply with other laws and regulations that are applicable to them. For example, if the organization employs more than a certain number of employees, they would need to comply with the provisions of the Employees Provident Fund (EPF) and Employees State Insurance (ESI) Acts.

It is important for organizations to comply with the above rules and regulations to avoid penalties and interest charges. It is recommended to seek the advice of a Chartered Accountant or Tax Consultant for proper compliance.

Q2) Foreign contributions received by an organization need to be reported in the Annual Return filed in Form 10B under the Income Tax Act. Here are the steps to deal with foreign contributions in Form 10B:

1. Identify the nature of the foreign contribution: The foreign contribution could be in the form of donations, grants, aid, technical collaboration, etc. The nature of the contribution needs to be identified as it will determine how it needs to be reported in Form 10B.

2. Check the eligibility to receive foreign contributions: Organizations need to be registered under the Foreign Contribution (Regulation) Act, 2010 (FCRA) to receive foreign contributions. If the organization is not registered under FCRA, it cannot receive foreign contributions.

3. Report foreign contributions in Part B of Form 10B: The foreign contributions received by the organization need to be reported in Part B of Form 10B. The contributions need to be classified as either “utilized for charitable purposes” or “not utilized for charitable purposes”. If the contribution has not been utilized for charitable purposes, it needs to be carried forward to the next financial year.

4. Disclose the details of foreign contributions: The auditor of the Organizations need to disclose the details of foreign contributions received during the financial year in Form 10B. This would include the name of the foreign donor, the amount of the contribution, the purpose of the contribution, etc.

5. Verify the compliance with FCRA: Organizations need to ensure that they are in compliance with the provisions of the FCRA while receiving and utilizing foreign contributions. Non-compliance with FCRA provisions could result in penalties and legal action.

It is important for organizations to get foreign contributions properly reported in Form 10B and comply with the provisions of FCRA to avoid any legal issues. It is recommended to seek the advice of a Chartered Accountant or Tax Consultant for proper compliance.