Decoding the audit of Charitable trusts or institutions

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Decoding the audit of Charitable trusts or
institutions
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• Every charitable trust or institution registered
  under section 12 or any fund or institution or
  trust or any university or other educational
  institution or any hospital or other medical
  institution registered under clause (23C) of
  section 10 needs to get its books of accounts
  audited mandatorily under the Income Tax
  Act,1961. Rule 16CC and Rule 17B of the Income
  Tax Rules 1962 as amended by the Income Tax
  Amendment (3rd Amendment) Rules, 2023 govern the
  provisions related to the audit of trusts
  mentioned above. As per the Notification dated
  21.02.2023, CBDT has issued new forms of Audit
  Report Form 10B and Form 10BB by the Income Tax
  Amendment (3rd Amendment) Rules,2023 which will
  come into effect from 01.04.2023. Lets briefly
  discuss the changes in the Rules 16CC and Rule
  17B Rule 16CC prior to the amendment by the
  Income Tax Amendment (3rd Amendment) Rules,2023
  states that Rule 16CC- The report of audit of
  the accounts of a fund or trust or institution or
  any university or other educational institution
  or any hospital or other medical institution
  which is required to be furnished under the tenth
  proviso to clause (23C) of section 10 shall be in
  Form No. 10BB. This means that any trust or
  institution registered under section 10(23C)
  shall file audit report in the Form 10BB
  irrespective of gross receipts of such trust or
  institution.

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• However, after the amendment by the Income Tax
  Amendment (3rd Amendment) Rules,2023, Rule 16CC
  states as under Rule 16CC. The report of audit
  of the accounts of a fund or institution or trust
  or any university or other educational
  institution or any hospital or other medical
  institution which is required to be furnished
  under clause (b) of the tenth proviso to clause
  (23C) of section 10 shall be in (a) Form No. 10B
  where (I) the total income of such fund or
  institution or trust or university or other
  educational institution or hospital or other
  medical institution, without giving effect to the
  provisions of the sub-clauses (iv), (v), (vi) and
  (via) of the said clause, exceeds rupees five
  crores during the previous year or (II) such
  fund or institution or trust or university or
  other educational institution or hospital or
  other medical institution has received any
  foreign contribution during the previous year or
  (III) such fund or institution or trust or
  university or other educational institution or
  hospital or other medical institution has applied
  any part of its income outside India during the
  previous year (b) Form No. 10BB in other cases.
  Explanation. For the purposes of sub-clause (II)
  of clause (a), the expression foreign
  contribution shall have the same meaning
  assigned to it in clause (h) of sub-section (1)
  of section 2 of the Foreign Contribution
  (Regulation) Act, 2010 (42 of 2010).Now, as
  per the amended Rule 16CC, any trust or
  institution registered us 10(23C) if its gross
  receipt exceeds Rs.5 crores or they have received
  any foreign contribution during the previous year
  or have applied any part of its income outside
  India during the previous year shall file its
  audit report in Form 10B.

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• And any trust or institution registered us
  10(23C) which does not fall into the above stated
  criteria shall file its audit report in Form
  10BB. So, it is clear that before amendment any
  trust or institution registered us 10(23C) needs
  to file its audit report in Form 10BB but now
  with effect from 01.04.2023, if any of the three
  conditions mentioned in the sub rule (a) of Rule
  16CC are satisfied , then form 10B needs to be
  filed. Else in other conditions, Form 10BB needs
  to be filed. Rule 17B prior to the amendment by
  the Income Tax Amendment (3rd Amendment)
  Rules,2023 states that Rule 17B. Audit report in
  the case of charitable or religious trusts,
  etc.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. While filing Form No. 10B, an
  auditor can accept as correct the list of persons
  covered by section 13(3) by the managing trustees
  and base his report on the strength of the
  certificateCircular No. 143, dated 20-8-1974.
  See also Circular No. 10/2019, dated 22-5-2019
  Circular No. 28/2019, dated 27-9-2019 Circular
  No. 30/2019, dated 17-12-2019 Circular No.
  2/2020, dated 3-1-2020 and Circular No. 3/2020,
  dated 3-1-2020 Condonation of delay in filing.
  Form Nos. 9A 10. However, after the amendment
  by the Income Tax Amendment (3rd Amendment)
  Rules,2023, Rule 17B states as under

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• However, after the amendment by the Income Tax
  Amendment (3rd Amendment) Rules,2023, Rule 17B
  states as under 17B. The report of audit of the
  accounts of a trust or institution which is
  required to be furnished under sub-clause (ii) of
  clause (b) of sub-section (1) of section 12A,
  shall be in (a) Form No. 10B where (I) the
  total income of such trust or institution,
  without giving effect to the provisions of
  sections 11 and 12 of the Act, exceeds rupees
  five crores during the previous year or (II)
  such trust or institution has received any
  foreign contribution during the previous year or
  (III) such trust or institution has applied any
  part of its income outside India during the
  previous year (b) Form No. 10BB in other cases.
  Explanation. For the purposes of sub-clause
  (II) of clause (a), the expression foreign
  contribution shall have the same meaning assigned
  to it in clause (h) of sub-section (1) of section
  2 of the Foreign Contribution (Regulation) Act,
  2010 (42 of 2010).Read more
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  haritable-trusts-institutions.htmlCopyright
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• Now, as per the amended Rule 17B, any trust or
  institution registered us 12A if its gross
  receipt exceeds Rs.5 crores or they have received
  any foreign contribution during the previous year
  or have applied any part of its income outside
  India during the previous year shall file its
  audit report in Form 10B. And any trust or
  institution registered us 12A which does not fall
  into the above stated criteria shall file its
  audit report in Form 10BB. By reading the above
  analysis, we can state that government has added
  certain criteria with effect from 01.04.2023 for
  audit report in Form 10B irrespective of whether
  the institution is registered us 10(23C) or us
  12A of the Income Tax Act, 1961. Disclaimer The
  contents of this topic are solely for the purpose
  of knowledge and cannot be tantamount to any kind
  of professional advice.
• Tags income tax act 1961, TrustRead more
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  haritable-trusts-institutions.htmlCopyright
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