Episode 4: Books Of Accounts To Be Maintained By Charitable Trusts/Institutions.”:
- Requirement to Maintain Books of Accounts [02:16]: Charitable trusts and institutions are required to maintain specific books of accounts as per Section 12A(1)(b) read with Rule 17A of the Income Tax Rules. A return of income must also be filed within the prescribed time under Section 139(1) or 139(4) of the Income Tax Act.
- Basic Books of Accounts [02:54]:
- Cash book
- Ledger
- Journals
- Copies of bills
- Books of accounts for any incidental business undertaking referred to under Section 11(4A) of the IT Act.
- Other Required Documents/Information [03:12]:
- Records of all projects of the institution
- Details of voluntary contributions
- Income from property held by the trust/institution
- Income other than contributions
- Details of application of income
- Amounts paid or credited by the trust/institution or fund
- Application of income outside India
- Deemed application of income
- Income accumulated or set apart
- Money invested or deposited in forms mentioned in Section 11(5) and forms other than Section 11(5)
- Application of deemed application of income
- Records of voluntary contributions with specific direction to form part of the corpus
- Records of contributions received for renovation or repairs of a place of worship
- Records of loans or borrowings
- A complete list of requirements is mentioned in Rule 17 of the Income Tax Rules.
- Retention Period [04:46]: Books of records and other documents must be maintained for a period of 10 years from the end of the relevant assessment year.
- Consequences of Non-Maintenance or Improper Maintenance [05:00]:
- Attracts provisions of taxing net income as per Section 13(10) and 13(11) of the Act.
- If no books are maintained, no audit is conducted, or no returns are filed, the net income (after disallowing capital expenditure) is subject to taxation.
- No expenditure incurred for loans, borrowings, corpus, or donations to others will be allowed.
- Penalty proceedings can be initiated for not maintaining books of accounts, not getting them audited, and not filing income tax returns.
- Due Dates and Relevant Forms for Filing Returns [05:58]:
- Non-auditable trust: July 31st (unless extended)
- Auditable trust: October 31st (unless extended)
- Accumulation (Form 10 or 9A): To be filed at least two months before the due date of filing returns under Section 139(1).
- Audit Report (Form 10B): Applicable where total income exceeds 5 crores, foreign contributions are received, or expenditure is made outside India.
- Audit Report (Form 10BB): For cases other than those requiring Form 10B.
- Both Form 10B and 10BB must be filed at least one month before the due date of filing the return of income under Section 139(1).
- As per Section 12A(1)(ba), the return must be filed within the time limits mentioned under Section 139(1) or 139(4).
- If the total income (without giving effect to provisions of Section 11 and 12) exceeds the maximum amount not chargeable to tax (currently ₹2.5 lakhs), it must be duly audited by an accountant as defined in the explanation to Section 288(2) of the Income Tax Act.
You can find more information on the Income Tax Department’s website at incometax.gov.in.