Income Tax Dept proposes to seek more details on foreign donations from trusts

The Income Tax Department on Tuesday proposed seeking more details including foreign donations received by trusts and institutions claiming deductions. The Central Board of Direct Taxes (CBDT) has issued a draft notification to amend Form 10B of the Income-tax Rules, 1962 by proposing changes in the audit report form to be filled by trusts and institutions. It has also sought stakeholders' comment on the same by June 5. 

This is the first time in over 45 years that the audit report for trusts/institutions are proposed to be amended. "As the Rule and Form were notified long ago, there is a need to rationalise them to align with the requirements of the present times," the CBDT said. 

As per the draft notification, the new Form 10B would seek more details from trusts and institutions and run into 8 pages, as against existing 3 page form.

The additional details sought in the annexure to the form include statute under which trust/institution is constituted, status of registration under I-T Act, object of trust institution, details of modification of object clause, details of income and application of income, compliance to conditions for application, etc., Registration status under FCRA, 2010, method of accounting policy, and TDS compliance.

In case of trust/institution with object classified as 'advancement of any other object of general public utility', the new form would seek details as to whether such activity is in the nature of trade, commerce, business or services in relation thereto for cess, fees etc., details of receipt from such activity.

Where business undertaking is held as 'property held under trust', proposed form requires extensive details and also filing of audit report in Form 3CA/3CB.

Nangia & Co LLP Partner (Audit & Assurance) Prateek Agarwal said as per the revised form, now the auditor needs to certify that in his opinion and to the best of the information and according to explanations given, the particulars given in the said Annexure are true and correct. Thus the responsibility of the assessee as well as the auditor will increase significantly post implementation of these changes.

"Considering that this Form was last revised 45 years ago, the details sought in the new form may seem too many, but they justify the needs of the present times. The revised audit form 10B shows the radical shift in the manner in which the tax and regulatory authorities look at the compliances," Agarwal said.

Ashok Maheshwary & Associates LLP Partner Amit Maheshwari said the proposed audit report format is much detailed from the earlier one and seeks extensive information on many facts which were not asked earlier such as the breakup of the donation received for corpus or other purposes and its further breakup into receipt of donation into cash and kind; detail of foreign donations received. 

It also seeks details of donors to whom certificates are issued for claiming deduction u/s 80G, and accounting policies adopted and impact of ICDS, etc.

"This was long overdue as the audit report format for charitable organisation was kept unchanged for the past many years and over time, the law and jurisprudence in regard to those have evolved to a great extent,? Maheshwari added.