{"id":4391,"date":"2025-09-10T11:08:39","date_gmt":"2025-09-10T11:08:39","guid":{"rendered":"https:\/\/www.luzenta.com\/blog\/?p=4391"},"modified":"2025-09-10T11:08:39","modified_gmt":"2025-09-10T11:08:39","slug":"expert-insights-on-trust-and-ngo-audit-in-form-10b-10bb-for-fy-2022-23-ay-2023-24","status":"publish","type":"post","link":"https:\/\/www.luzenta.com\/blog\/expert-insights-on-trust-and-ngo-audit-in-form-10b-10bb-for-fy-2022-23-ay-2023-24\/","title":{"rendered":"Expert Insights on Trust and NGO Audit in Form 10B & 10BB for FY 2022-23 | AY 2023-24"},"content":{"rendered":"

The audit of trusts and NGOs in India is not simply a matter of routine compliance; it plays a critical role in maintaining the credibility and transparency of charitable and religious organisations. The Income-tax Act prescribes specific conditions under which an audit becomes mandatory and dictates the form and manner in which such audit reports must be submitted.<\/span><\/p>\n

For the financial year 2022-23 and assessment year 2023-24, the audit reporting landscape for trusts has undergone significant transformation with the introduction of revised formats for Form 10B and Form 10BB. These changes reflect an effort to align audit reporting with the broader compliance framework, particularly the data requirements of ITR-7, and to standardise the information received by the Income Tax Department.<\/span><\/p>\n

We examine the legal framework, applicability criteria, recent amendments, and structural overview of the updated forms, setting the stage for a detailed exploration of their contents in the subsequent parts.<\/span><\/p>\n

Requirement of Audit under the Income-tax Act<\/b><\/p>\n

Mandatory audit condition<\/b><\/p>\n

Under section 12A(1)(b) of the Income-tax Act, a trust or institution is required to have its accounts audited if its total income, computed without giving effect to sections 11 and 12, exceeds the maximum amount not chargeable to income tax. The term accountant is defined in section 288(2), and such an individual must carry out the audit in the prescribed manner.<\/span><\/p>\n

The audit report must be furnished by the specified date. This date is one month before the due date for furnishing the return of income under section 139(1). Failure to meet this timeline can have serious consequences for the exemption claims of the organisation.<\/span><\/p>\n

Consequences of non-filing<\/b><\/p>\n

Up to assessment year 2022-23, the failure to furnish the prescribed audit report meant that the benefits under sections 11 and 12 were withdrawn for that year. From assessment year 2023-24 onwards, the approach has shifted. Instead of outright denial of exemption, the income will be computed in accordance with sections 13(10) and 13(11), which may still lead to significant tax liabilities.<\/span><\/p>\n

This change is intended to balance the need for compliance with the recognition that non-filing does not necessarily imply complete ineligibility for exemption, but the adjusted computation rules can still result in financial implications for the trust.<\/span><\/p>\n

Forms for Filing Audit Report<\/b><\/p>\n

New forms and rule changes<\/b><\/p>\n

The reporting formats and procedural requirements for audits of charitable and religious entities are governed by Rules 16CC and 17B of the Income-tax Rules, 1962. With effect from 1 April 2023, these rules have been amended through the Income-tax (3rd Amendment) Rules, 2023. The amendments have introduced new formats for Form 10B and Form 10BB, accompanied by expanded annexures and the use of mandatory code numbers for various disclosures.<\/span><\/p>\n

This overhaul addresses longstanding concerns with the old forms. The previous Form 10B, in place since 1973, and Form 10BB, in place since 2006, had become outdated. They did not reflect the numerous changes in the legal and regulatory environment, particularly those affecting the registration and approval of charitable institutions under section 12AB and section 10(23C).<\/span><\/p>\n

The mismatch between the data collected in these forms and that required for ITR-7 filing created inefficiencies for both the organisations and the tax authorities. The new forms aim to create consistency, provide for more detailed reporting, and enable easier cross-verification of information across different filings.<\/span><\/p>\n

Rationale for change<\/b><\/p>\n

Over the years, amendments to the law have sought to bring uniformity between the regimes under section 12AB and section 10(23C). However, the audit forms had not kept pace with these changes. For example, requirements for reporting certain transactions, treatment of voluntary contributions, and classification of income were handled differently in the two regimes, leading to confusion and potential non-compliance.<\/span><\/p>\n

The new forms are more comprehensive. They require detailed information linked to specific codes, which facilitates analysis by the Income Tax Department and helps ensure that the reporting aligns with the criteria for registration renewal and exemption claims. This move towards structured and standardised data collection reflects a broader trend towards digitisation and analytics-driven compliance.<\/span><\/p>\n

Pre and post amendment position<\/b><\/p>\n

Before the amendment, there were two distinct forms: Form 10B for entities registered under section 12AB and Form 10BB for entities approved under section 10(23C). Now, the forms are common to both regimes, but the applicability is determined by the size and nature of the organisation.<\/span><\/p>\n

Form 10B is intended for larger or specified NGOs, while Form 10BB applies in other cases. The separation is no longer based on the legal provision under which the entity is registered or approved but on practical factors such as income thresholds and foreign contribution status.<\/span><\/p>\n

Applicability of Forms<\/b><\/p>\n

Criteria for Form 10B<\/b><\/p>\n

Form 10B must be filed if any of the following conditions are met:<\/span><\/p>\n