Form 10BB of the Income Tax Act is a form that every charitable trust and educational institution or any hospital or other medical institution formed with the intention of charity and not profit making, has to file to avail of deduction under section 10(23C) of the IT Act, 1961.
As per section 10(23C) of the Income Tax Act, certain government and non-government universities and educational institutions can claim full exemption. The institutions or universities should be strictly for educational purposes, not for profit making. While government educational institutions are fully exempt, non-government institutions having an annual income of up to INR 5 crores are exempt. Educational institutions having an annual income exceeding INR 5 crores can claim exemption subject to certain approvals.
Form 10BB consists of all the information about the trust/educational institution's incomes, expenses, assets, and liabilities. Form 10BB is filed as an audit report by a chartered accountant after auditing the books for the given financial year.
As per the Taxation Laws Amendment Act (2006), all trusts or organizations are eligible to claim an exemption under section 10(23C). To claim the exemption, the organizations must furnish their audit reports in Form 10BB.
Moreover, it is important for trusts and educational institutions to get their books audited by a Chartered Accountant if their annual income exceeds the minimum threshold.
Form 10BB allows government and non-government educational institutions and any hospital or other medical institution with non-profit making objectives to avail of exemption under section 10 of the Income Tax Act. Any charitable trust or educational institution registered under section 12 A or 12AA of the IT Act, 1961, is eligible to claim an exemption under section 10(1) or 10(23C) of the Income Tax Act. The organization must file its ITR using ITR-7 and fill and submit its audit report through form 10BB of the Income Tax Act to claim an exemption under the abovementioned sections.
You have to select the relevant sub-clause from the drop-down menu. While section A of the form requires you to fill in your personal information, section B requires you to furnish the details about your aggregate annual receipts and the exemption claimed.
Before you start filling out Form 10BB of Income Tax Act, make sure you have the following documents -
- Balance Sheet
- Income and expenditure statement
The form 10BB of the IT Act is divided into the following three parts -
Part A - General information
- Name of the institution
- Official Address
- PAN number
- Assessment Year
- Registration number
- Date of Approval of the Institution
- The relevant sub-clause under section 10(23C)
Part B - Income Application
- Core business activities of the institution
- Total revenue and the amount spent during the year to meet the trust’s objective.
- If the income is used for purposes other than the trust’s objective, the details of such use should be furnished.
- Details of the income collected by the institution that exceeds 15% of the total income.
- The profit reserves of the organization should be at most 15% of the total income. In other words, charitable trusts or institutions must not spend less than 85% of their total income on the trust’s activities.
Part C - Other Information
- Details of any investments in funds or other assets
- Statement of Income & Expenditure A/c of the organization
- Details of donations/transfers to other trusts.
- Voluntary contributions received in the previous year
- Any anonymous donation made in the previous year
To fill Form 10BB of Income Tax Act, follow the steps below:-
- Step 1: Login on to e-filing portal
- Step 2: Choose "File Income Tax Forms" after clicking on "Income Tax forms" after clicking on e-File.
- Step 3: On Form 10BB, select "Persons not dependent on any Source of Income" & then select "file now."
- Step 4: After attaching necessary documents, assign it to CA, & click "Continue."
- Step 5: CA will accept assignment by logging in & uploading form.
- Step 6: The assessee must accept form that CA has uploaded via Worklists under "For Your Action" button.
While Form 10B and 10BB might sound similar, they differ. Here is the difference between Form 10B and Form 10BB of Income Tax Act 1961.
| Form 10B |
Form 10BB |
| Form 10B is filed based on rule 17B of section 12AB. |
Form 10BB is filed based on rule 16CC under section 10. |
| Form 10B regulates charitable institutions and religious trusts. |
Form 10BB regulates educational institutions formed for educational purposes or any hospital or other medical institution with not profit-making objectives. Form 10BB works as an audit report for universities, other educational institutions, and medical institutions. |
The due date for filing Form 10BB of Income Tax Act is 30th September of the relevant Assessment year.
As per the Taxation Law Amendment Act (2006), every organization that wishes to avail of the exemption under section 10(23C) must fill and submit Form 10BB of Income Tax Act and furnish the details about its income, expenses, assets, and liabilities.
It is mandatory to get your accounts audited by a certified Chartered Accountant and furnish an audit report through Form 10BB if you want to avail of the exemption under section 10(23C). Get assistance from a CA and fill out Form BB today!
Late filing of Form 10BB can lead to the withdrawal of exemption under Section 10(23C) of the Income Tax Act,1961. This means that the trust or institution won’t be eligible to claim exemption, and thus it will be taxable.
Failure to meet the specified requirements and deadlines for filing Form 10BB can result in several negative outcomes, such as:
- Non-compliant entities risk losing their tax-exempt privileges, making them liable for income tax.
- The Income Tax Department may levy fines for non-compliance, causing financial burdens.
- Non-compliance can limit an organization’s eligibility for government grants and financial support.
- It can harm the organization’s credibility and undermine its reputation in the sector.
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