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CBDT overhauls format of audit report applicable to charitable institutions
This Tax Alert summarizes Notification No. 7/2023 dated 21 February 2023 (Notification) issued by the Central Board of Direct Taxes (CBDT)[1], which substitutes the existing rules[2] under the Income Tax Laws (ITL). These rules prescribe the revised audit reports[3] for reporting by charitable institutions and are effective from 1 April 2023.
Charitable institutions fulfilling the following criteria are required to furnish audit report in Form 10B: (i.) Having total income in excess of INR 5 Cr. before applying the exemption provisions; or (ii.) Having received foreign contribution; or (iii.) Having applied any part of their income outside India. The scope of the revised form has been substantially expanded, including introducing new reporting requirements.
Charitable institutions not covered by the above criteria are required to furnish audit report in Form 10BB which has limited disclosures as compared to Form 10B.
[1]Apex body of direct tax administration in India
[2]Rules 16CC and 17B of the Income Tax Rules, 1962
[3]Forms 10B and 10BB