Section 80G of the Income Tax Act 1961, allows a deduction to the donor in respect of donations made to charitable institutions. The Finance Act 2021 introduced an amendment where the charitable institution that holds an 80G certificate needs to submit a statement of particulars of donation in each financial year in Form 10BD to the Income tax department within the stipulated time. Failure to furnish the statement will attract penalties. This year the Form 10 BD is to be filed by 31st May 2024.
Here are some frequently asked questions that can ease out the process of filing Form 10BD:
1. Whether filing of online Form 10BD mandatory for every charitable trust or institution?
Yes, Income tax has made filing of Statement of Donations received during the previous financial year (in Form 10BD) mandatory.
2. If any trust or institution has tax exemption certificate u/s 12AA/12AB but has not applied for nor has any tax deduction certificate for donors, must file the Form 10BD or not?
No. The new Rule 18AB of Income Tax Rules is applicable to all entities that have approval u/s 80G and u/s 35(1) of the Income Tax Act, 1961 which allows tax deductions for donors.
3. What is the due date for this filing the form?
Form 10BD for Financial Year 2023-24 is required to be filed by 31st May 2024.
4. What if the organisation fails to comply or misses the due-date of 31st May?
Section 234 G of the Income Tax Act mandates every organisation having 80G or 35(1) registration, to comply with the filing of Form 10BD & Form 10BE. Failure to comply will attract a fee of Rs 200/- per day of delay for every day during which the failure continues. Further section 271K of the Income Tax Act stipulates a penalty of not less than Rs 10,000, which may extend upto Rs 1,00,000 for the delay in furnishing or failure to file such statement of donations in Form 10BD.
5. What if my organisation has not received any donation or grant during the financial year? Whether filing of Nil Return is mandatory?
If your organisation has not received any donation or grant during the financial year you need not file Form 10BD. The portal so far does not seem to accept Nil return.
6. Whether every single donation or grant received during the previous financial year to be reported in Form 10BD?
No. In online Form 10BD, only upload the details of information and donors who are interested in getting the tax deduction u/s 80G or u/s 35(1) of the Income Tax Act.
7. The organisation receives lots of retail donations of small amounts (through crowdfunding platforms, where donors do not provide PAN details. Do we need to include these donations in Form 10BD?
If the donor is interested in getting the benefits of tax deduction for his donation, PAN details is mandatory and can be included in the Form 10BD.
8. The organisation collects donations through cash boxes which is installed at a few commercial organisation. Does the organisation report these donations in Form 10BD?
No. These are anonymous donations. Please note that section 115BBC(1), the anonymous donations are taxable at the rate of 30% if the aggregate anonymous donations exceed one lakh rupees or five per cent of the total donations received during the fiscal year, whichever is higher.
9. How do we report donations received in cash?
Under Section 80G(5D) of the Income Tax Act, 1961 any donation made in cash in excess of Rs 2000 is not allowed as a deduction.
10. What if donations that are reported in our Annual Return in ITR-7 do not match with donations that we report in Form 10BD?
Form 10BD includes those donations who can avail tax deduction under section 80G/35(1), whereas annual return includes all donations.
11. Whether grant received from Indian grant making foundations are to be included in Form 10BD?
Generally Indian grant making foundations are tax exempt and do not need to avail tax deductions under section 80G or 35(1). However, in case of grant making foundations that are not exempted, and if they want to avail exemption, the donation should be included in Form 10BD.
12. Whether CSR grants received from companies be reported in Form 10BD?
Yes, CSR grants received from companies should be reported in Form 10BD if the companies are seeking tax deduction.
13. Whether foreign contributions received from a ‘foreign source’ under FCRA 2010 also be reported in Form 10BD?
No, foreign contributions received from a ‘foreign source’ under the Foreign Contribution Regulation Act (FCRA) 2010 should not be reported in Form 10BD.
14. Whether we request every donor to furnish contact details and PAN?
As a best practice, always collect the PAN and contact details of all donors.
15. Whether Certificate of Donation (for Donor) in Form 10BE is mandatory and when should the certificate in Form 10BE to be issued?
Yes, after filing the Statement of Donations in Form 10BD, it is mandatory to issue the Certificate of Donation in Form 10BE to the donors who have made eligible donations and requested for the certificate. The Certificate of Donation (Form 10BE) should be issued to the donors within the prescribed timeline, which is usually within one month from the date of filing the Statement of Donations in Form 10BD.
16. Whether the Certificate of Donation (Form 10BE) be issued in a digital or electronic format?
Yes, the Certificate of Donation (Form 10BE) can be issued in a digital or electronic format.
17. Can the Certificate of Donation (Form 10BE) be issued for donations made in previous financial years?
No, the Certificate of Donation (Form 10BE) should be issued only for donations made during the specific financial year. It cannot be issued for donations made in previous financial years.
18. Is it necessary to keep a record of the issued Certificates of Donation (Form 10BE)?
Yes, the organisation should maintain a proper track of the issuance of certificates for each financial year.
19. Can the Certificate of Donation (Form 10BE) be modified or amended after it has been issued?
Yes. Once the Certificate of Donation issued, if any changes are needed, the Form 10 BD can be modified, and then new Form 10 BE can be generated.
This article was originally published by Pacta.
