Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
When audit is needed
If income before claiming exemption exceeds the basic exemption limit, the trust must be audited.
Form 10B / 10BB
The right form depends on the trust’s size and receipts; filing the wrong one or filing late can cost the exemption. Confirm which form applies.
Timing and consequences
For a trust, the audit report in Form 10B or 10BB has to be filed at least a month before the return due date — filing it late, or filing the wrong form for the trust’s size, can lead to the exemption under Sections 11 and 12 being denied, taxing the whole income. The choice between 10B and 10BB turns on factors like total income, foreign contributions and whether the trust runs a business undertaking. The trust must also have applied or accumulated income within the permitted limits to keep the exemption. Because the cost of a slip is the entire exemption, the form selection and filing dates deserve careful attention each year. The audited accounts also feed the trust’s return in ITR-7, and the figures of income applied, accumulated and set apart must agree across the audit report and the return, so it helps to prepare the two together.