CBDT Issues Clarifications on Various Provisions Relating to Charitable and Religious Trusts

Circular No. 6 of 2023, dated 24-05-2023

The Central Board of Direct Taxes (CBDT) has issued a few clarifications with respect to various provisions related to charitable and religious trusts following amendments made by the Finance Act 2023.

The clarification covers various aspects relating to the applicability of section 115TD in case the trust fails to apply for registration, an extension of the due date of furnishing Form No. 10BD and Form No. 10BE, the applicability of provisional registration, the extension of the due date for furnishing statement of accumulation and clarification with respect to the furnishing audit report in Form 10B.

a) Extension of the due date to apply for registration/approval for the purpose of section 115TD

The Finance Act 2023 amended section 115TD to tax the accreted income of the trusts who have not applied for registration/ approval within the prescribed time limit. This amendment has come into effect from 01.04.2023 and therefore applies to the assessment year 2023-24 and subsequent assessment years.

The last date for filing an application by the existing trusts seeking registration/ approval was extended to 25.11.2022 vide Circular No. 22 of 2022 dated 01.11.2022. Further, the due date for furnishing applications for registration/approval by the provisionally registered/approved trusts was extended till 30.09.2022. These trusts shall be subject to tax under section 115TD if the application is not made by 25.11.2022 or 30.09.2022, as the case may be.

Exercising the powers under section 119, the Board has extended the due date to file an application in Form No. 10A or Form No. 10AB till 30.09.2023, where the due date for making such application has expired prior to such date.

b) Due date to file Form No. 10BD and Form 10BE extended

The Board has extended the due date for furnishing of statement of donation in Form No. 10BD and the certificate of donation in Form No. l0BE in respect of the donations received during the financial year 2022-23 to 30.06.2023.

c) Applicability of provisional registration

It has been clarified that the provisional approval or provisional registration for section 10(23C), section 11 or section 80G, shall be effective from the assessment year relevant to the previous year in which the application is made and shall be valid for three assessment years subject to the provisions of the aforementioned sections.

d) Benefit of accumulation/deemed accumulation not to be denied if the form furnished before furnishing the return of income

Section 11 was amended by the Finance Act, 2023 to provide that statement of accumulation must be furnished at least two months before the due date of furnishing the return of income under section 139(1). A similar amendment was made in section 10(23C).

It is clarified that the statement of accumulation in Form No. 10 and Form No. 9A must be furnished at least two months before the due date of furnishing the return of income so that it may be taken into account while auditing the books of account. However, the accumulation/deemed application shall not be denied to a trust as long as the statement of accumulation/deemed application is furnished on or before the due date of furnishing the return as per section 139(1).

e) Furnishing details with respect to certain payments include Payment through account payee cheques

The Auditor’s Report furnished in Form No. 10B and Form No. 10BB requires the auditor to bifurcate certain payments or applications in electronic modes and non-electronic modes. Notes to the said Forms provide for all other electronic modes, including Credit Card, Debit Card, Net Banking, IMPS, UPI, RTGS (Real Time Gross Settlement), NEFT (National Electronic Funds Transfer), and BHIM (Bharat Interface for Money) Aadhar Pay but does not include account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account.

Therefore, it has been clarified that for the purposes of Form No. 10B and Form No. 10BB, electronic modes referred are in addition to the account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account.

Click Here To Read The Full Circular