Hospital, educational institutions, trusts, funds, etc, will need to file audit reports for Assessment Year 2023-24 by March 31 to claim tax exemption, the Central Board of Direct Taxes (CBDT) said on Tuesday. Earlier the due date was October 31. Failing to not filing the audit report so will result in tax demands, the board said.

Any university, other educational institution, hospital, other medical institution fund, institution, trust or any trust or fund registered under section 10 and section 12AA of the Income Tax Act gets tax exemption subject to fulfilling certain conditions. One of the conditions — in case the total income exceeds the maximum amount which is not chargeable to income-tax in any previous year, the trust or institution is required to get its accounts audited and furnish the audit report in the prescribed format before the specified date.

There are two forms — 10B and 10BB. Earlier, based on old or new tax regime, these forms were to be filled. However, after an amendment through Finance Act, 2023, a trust or institutions is required to fill Form 10B in case its total income exceeds ₹5 crore or if it has received any foreign contribution or if it has applied any part of its income outside India. In all other cases Form 10BB required to be filled. Originally these forms for AY 24 were to be filled on or by October 31, 2023.

However, the board noted that in a number of cases trusts/institutions have furnished audit report in Form10B as against 10BB and vice versa.  “Non-furnishing of audit report in the prescribed form would result in denial of exemption in such cases, as it is one of the conditions which is required to be satisfied for claim of exemption. The denial of exemption on this account may result in creation of tax demand,” the Board said. Now, all these trusts or institutions have been given time till March 31 to furnish the audit report in the applicable forms.

Commenting on the latest move, Amita Jivrajani, Director, Nangia Andersen India, said overhauling the format of audit report and criteria’s to furnish the same resulted in widespread confusion among taxpayers, leading to inadvertent submission of inaccurate audit reports in Form 10B instead of Form 10BB or vice versa. One of the potential concerns stemming out of an incorrect selection of the audit report is the denial of exemption under Section 11 and Section 12 of the Income Tax Act, 1961.

“The CBDT’s decision to allow entities to rectify audit reports already submitted in the incorrect form vide this Circular aims to streamline compliance for affected taxpayers and facilitate a smooth transition to the new reporting requirements,” she said.

comment COMMENT NOW