IT Department requires details on foreign donations received by trusts

The Income Tax Department on Tuesday proposed amendments to seek additional details such as foreign donations received by trusts and organisations claiming deductions.

The Central Board of Direct Taxes (CBDT) released a draft notification to change Form 10B and has proposed changes in the audit report to be filed by trusts and organisations. The CBDT has welcomed comments from the stakeholders till 5 June 2019.

This is the first time in 45 years that the CBDT has made amendments in the audit report. As per the board, it’s been a long time since Rules and Forms were notified and they must be rationalised to align with the current requirements.

The new Form 10B asks for more detailed information from trusts and organisations. The existing Form 10B is three pages long, while the proposed Form 10B runs into eight pages.

Few of the additional details asked in the annexure to the form are status of the registration under the IT Act, the statute under which the trust is constituted, aspects of modification of object clause, object of trust institution, compliance to conditions for applications, details of income and use of income, the registration status under FCRA, 2010, TDS compliance, and the method of accounting policy.

The proposed audit report form is a very detailed one and asks for extensive details on various facts that were not asked before. Few of the additional information requested is the breakup of donations received, donors to whom the donation certificates were issued, policies adopted, and impact of ICDS.

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If the business undertaking is a ‘property held under trust’, then the proposed form requires detailed information and needs filing of an audit report as per Form 3CA/3CB.

As per the amendments, auditors must now certify that they have provided true and accurate information in the annexure. The implementation of the new changes would add responsibility for both assessee and auditor.

The details sought under the new amendments might seem lengthy, especially when you consider the fact that this form was last amended way back in 1964.

The new Form 10B depicts the radical changes in the way tax authorities look at the compliances and hence the amendments are justifiable.