CBDT has issued a circular no. 06 of 2023 Dt. 24.05.2023 for providing clarification in relation to various matters of Religious and Charitable trust under the Income Tax Act.
Clarification regarding application of section 115TD for failure to apply to registration/approval:
Extension of time limit for making application of Re-registration:
Finance Act, 2023 has, inter-alia, amended section 115TD of the Act, so as to provide that the accreted income of the trusts not applying for registration/ approval, within the specified time, shall be made liable to tax in accordance with the provisions of section 115TD of the Act. This amendment has come into effect from 01.04.2023 and therefore applies to assessment year 2023-24 and subsequent assessment years.
However, many people were unable to submit the application for re-registration and hence are confused as to whether they have to pay tax under 115TD. In order to mitigate hardship CBDT extends the time limit to apply for re-registration by virtue of power under section 119 of the Act as under:
(i) Form No. 10A, in case of an application under clause (i) of the first proviso to clause (23C) of section 10 or under sub-clause (i) of clause (ac) of sub-section (1) of section 12A or under clause (i) of the first proviso to sub-section (5) of section 80G of the Act, till 30.09.2023 where the due date for making such application has expired prior to such date;
(ii) Form No. 10AB, in case of an application under clause (iii) of the first proviso to clause (23C) of section 10 or under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act, till 30.09.2023 where the due date for making such application has expired prior to such date.
In view of the above, trusts may now apply for registration/approval under clause (i) or clause (iii) of the first proviso to clause (23C) of section 10 or sub-clause (i) or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act by 30.09.2023 and where such application is made by the said date and registration/approval is granted, the provisions of clause (iii) of sub-section (3) of section 115TD of the Act shall not apply on account of delay in making application.
Hence, in cases where the trust has already made an application in Form No. 10AB under the said provisions but such application has been furnished after 30.09.2022 and where the Principal Commissioner or Commissioner has not passed an order before the issuance of this Circular, the pending applicati on in Form No. 10AB may be treated as a valid application.
Extension of due date for furnishing of Form No. 10BD:
In view of extension provided to funds or institutions seeking approval under sub-section (5) of section 80G of the Act, as discussed in paragraph 5(i), in the exercise of the power under section 119 of the Act, the Board also extends the due date for furnishing of statement of donation in Form No. 10BD and the certificate of donation in Form No. 10BE in respect of the donations received during the financial year 2022-23 to 30.06.2023.
Clarification regarding applicability of provisional registration:
It is hereby clarified that in case of trusts, funds or institutions seeking provisional approval or provisional registration as referred to in para 10 and 11, the said provisional approval or provisional registration shall be effective from the assessment year relevant to the previous year in which the application is made and shall be valid for a period of three assessment years subject to the provisions of clause (iii) of the first proviso to clause (23C) of section 10 or in sub-clause (iii) clause (ac) of sub-section (1) of section 12A or clause (iii) of the first proviso to sub-section (5) of section 80G of the Act, as the case may be.
Clarification regarding denial of exemption in case where the statement of accumulation is not filed by the due date:
Finance Act, 2023 has amended sub-section (2) of section 11 of the Act to provide that statement of accumulation as referred to in clause (a) of said sub-section [Form No. 10] is required to be furnished at least two months prior to the due date of furnishing return of income under sub-section (1) of section 139. Therefore, the due date for furnishing Form 10 and Form 9A from AY 2023-24 is 30.08.20223 where assessee trust is getting audited under Income Tax law or any other law.
It is clarified that the statement of accumulation in Form No. 10 and Form No. 9A is required to be furnished at least two months prior to the due date of furnishing return of income so that it may be taken into account while auditing the books of account. However, the accumulation/deemed application shall not be denied to a trust as long as the statement of accumu lation/deemed application is furnished on or before the due date of furnishing the return as provided in sub-section (1) of section 139 of the Act.
Clarification regarding audit report to be furnished by Trust in Form No. 10B:
Revised audit report in Form No. 10B and Form No. 10BB have been notified vide Notification No. 7 of 2023 dated 21.02.2023 so as to provide that the report of audit of the accounts of a trust, shall be furnished in –
(a) Form No. 10B where,
(i) the total income of trust, exceeds Rs five crores during the previous year; or
(ii) such trust has recei ved any foreign contri bution during the previous year; or
(iii) such trust has app li ed any part of its income outside India during the previous year;
(b) Form No. 10BB in other cases.
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