In a recent development, the Goa Chamber of Commerce and Industry (GCCI) has reached out to Union finance minister, Nirmala Sitharaman, with a plea to postpone the audit stipulations for charitable trusts by one year. This appeal comes in the wake of recent modifications to the forms (10B and 10BB) meant for charitable trusts, which were both overhauled this year and made available to the public relatively late, constraining charitable entities to meet the imminent September 30 deadline.
Late Form Releases: A Challenge for Charities
GCCI’s president, Shrinivas Dempo, addressed the Union finance ministry, spotlighting the challenges currently besieging not-for-profit organizations. Dempo noted, “The utility software essential for these forms’ submission on the income tax portal was introduced as late as September’s first week in 2023. This provides an extremely narrow window for both taxpayers and professionals to gather and present the comprehensive information demanded by these forms.”
Highlighting the unique challenges charities face, Dempo elaborated, “Contrary to major businesses, many charitable institutions lack full-time accounting professionals. Most of these organizations are reliant on volunteers or freelance accountants for their financial documentation.”
The Nuances of the Income Tax Act
The Income Tax Act mandates that specific trusts, inclusive of educational institutions, hospitals, and NGOs, must have their financial books audited. Following the audit, the respective reports must be submitted through forms 10B and 10BB. Non-compliance with the September 30 submission deadline results in the denial of tax reliefs and other associated benefits.
For the fiscal year 2023-24, the forms underwent a total revamp. Auditors are now tasked with reporting detailed information from both the current year and previous years. Dempo expressed concern, stating, “The revamped forms contain multiple clauses demanding a profound grasp of the statute. Given the stringent timeframe, it’s almost impossible for charities with restricted resources to adhere to such expansive reporting prerequisites.”
Moreover, Dempo mentioned the struggle faced by chartered accountants in trying to fulfill the September 30 deadline for both charitable trusts and corporate entities.
A Call for Consideration
Dempo urged for flexibility, stating, “Given the postponed availability of the Income Tax utilities and the realistic challenges of compliance, we propose that these forms’ submission be postponed by a year.” He also suggested that the entities be allowed to report in the forms’ prior version for the current fiscal year or, as an alternative, considerably extend the deadline for the new forms’ submission.
Dempo also emphasized that charitable trusts are already tax-exempted. Hence, pushing the new reporting guidelines back by a year wouldn’t dent the central government’s tax revenues.
