Requirement of trust to conduct Tax audit:
Trust which are registered under section 12, 12A, 12AB of the Income tax and which needs to get benefit of exemption prescribed under section 11 and 12 are only required to get their books of accounts audited if they fall within the limits prescribed under section 12A(1)(b) as under:
“where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 [before the specified date referred to in section 44AB and the person in receipt of the income furnishes by that date] the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed;]”
Thus, all the trust’s are not required to get their books of accounts audited only those trust are required to gets their books of accounts audited by a Chartered accountant which:
(1) are registered under section 12, 12A and 12AB and are taking benefit of exemption under section 11 and 12 and
(2) the total income of the trust without giving effect of section 11 and 12 [i.e. without considering application of income] exceeds maximum amount not chargeable to tax.
The basic exemption limit for trust would depend on the constitution of trust.
Now, that we have decided which trust needs to get their books of accounts audited by accountant, let’s see which form needs to be used for submitting report of such audit:
Rule 17B of the Income tax rules prescribes Form 10B for submitting audit report in relation to trust who are required to get their books of accounts audited under section 12A(1)(b). Relevant extract of rule is as under:
“The report of audit of the accounts of a trust or institution which is required to be furnished under clause (b) of section 12A, shall be in Form No. 10B.”
Procedure to file Tax audit report for Trust in Form 10B
To file the tax audit report the assessee trust needs to add the Chartered Account in it’s e-filing profile. To know more about adding CA CLICK HERE: How to add CA on new e-filing website for submitting various forms and reports | E-filing 2.0 – Taxontips
Once the CA has been added for filing Form 10B, Chartered Accountant will be able to view such request in his Pending work list and can accept the same from such pending work list.
Once, accepted he will get an option to file Form 10B in such pending work list only.
It is important to note that as of now online option is available for filing of Form 10B i.e. one cannot directly upload xml or JSON file of Form 10B from his/ her software. One needs to fill and file Form 10B online on e-filing portal.
One more requirement for filing of Form 10B now is that, the auditor needs to even upload balance sheet and income and expenditure statement compulsorily along with filing of Form 10B [which was not mandatory or required earlier in case of trust. Thus, this additional requirement has been added to file Form 10B i.e. tax audit report in case of trust.
Further, once tax audit report is submitted, the assessee trust needs to either accept or reject the Form 10B filed by the Chartered Accountant. Only after the same is accepted or rejected by Chartered Accountant then only the procedure of filing tax audit will be considered as complete.
Recently CBDT has extended due date for validating UDIN on e-filing website for all forms: CBDT extends last date to update UDINs for all IT forms on e-filing website till 31.01.2022 – Taxontips
Issues while Filing Tax audit report in Form 10B:
Below are various issues people are facing on new e-filing website as on date:
1. The filing of Form 10B as on date can be only done in online manner and hence Chartered Accountant has to again fill details online.
2. While submitting Form 10B Chartered Accountant is facing issues where after submitting Form the website gives an error of “Invalid format of ARN” and hence the Form 10B is not getting filed.
3. Many assessee’s are facing issue while rejecting Form 10B and the rejection request is not getting processed.
The trust needs to file Income tax return based on the provisions of section 139 and as per the constitution of trust. Normal charitable and religious Trust needs to filed Income tax return as per section 139(4A) and relevant extract of same is as under:
“Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed under this Act without giving effect to the provisions of sections 11 and 12) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).”
The due date for filing tax audit report and Income tax return for Trust for AY 2021-22 as on date is as under:
Tax audit report: 15.01.2021 [ Normal Due date: 30.09.2021]
Income tax return in case of Audit: 15.02.2021 [Normal due date: 31.10.2021}
Income tax return in Non-audit cases: 31.12.2021 [Normal due date: 31.07.2021]
Guidance on above article by:
CA Naman Maloo (C.A., B.Com)
He is currently working as Partner – Direct Tax with Jain Shrimal & Co. in Jaipur having experience in dealing Assessments, Tax Audit, Tax planning for NRI, Business planning and consultation.
E-mail: naman.maloo@jainshrimal.in | LinkedIn: Naman Maloo
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