Form 10BB of Income Tax Act: Check Applicability

Form 10BB of Income Tax Act

Updated on 15 Mar, 2024

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Form 10BB is used by educational institutions, hospitals, medical institutions, and charitable trusts, formed as per the not-for-profit framework or philanthropic/ charitable intentions. Form 10BB of the Income Tax Act can help such institutions stay legal and avail of Section 10(23C) deductions.

Let us understand form 10BB applicability, form 10B and 10BB difference and more.

How is charitable purpose defined under the Income Tax Act?

The sub-section 15 of the Income Tax Act Section 2 defines ‘charitable purpose’ as any activity that includes either of the following with an intention to charity:

Education
Medical relief
Relied to the poor
Public utility advancement (with receipts up to 20 per cent of total receipts that the trust accepts)

There are also a few rules and regulations that these organisations must abide by. These are as follows:

Trust’s beneficiaries must be the general public.
The beneficiaries must not be discriminated against based on religion, caste, creed or gender.
The income tax authorities’ approval is required for any change in the organisation’s object clause.
Founders and other related parties are barred from receiving benefits under Section 80 TTB of the Income Tax Act.
In case of termination, the assets must be transferred to another similar objective-driven trust before its dissolution.
Trusts’ nature is irrevocable.

For any of the organisations, as mentioned above, to claim with deduction under section 10(23C) of the IT Act, 1961, they have to file form 10BB.

What is Form 10BB?

Form 10BB is a comprehensive statement of a charitable organisation or institution’s assets, liabilities, income and expenses. This form will be filed as an annual audit for the financial year under consideration by the assessee.

Particular government or non-government organisations or institutions, as mentioned above, are eligible to claim full tax exemption under section 10(23C).

For example, a government not-for-profit educational institution is fully exempted under section 10(23C). However, non-government organisations with annual income exceeding ₹5 crores would require certain approvals for claiming exemptions. Such institutions can claim full exemption if their annual income does not exceed ₹5 crores.

What are the different parts of the 10BB of the Income Tax Act?

Form 10BB of the Income Tax Act has three sections, namely, Part A, Part B and Part C.

The assessee’s general information is enquired in Part A.
The charitable institution or organisation’s assets, liabilities, revenue and expenses are detailed in Part B.
The details of the assessee’s investments and other financial transactions are furnished in Part C.

This list is presented in the table below.

Part A	Part B	Part C
Institution or Organisation’s Name	Institution or Organisation’s Core Business Activities	Any investment details in funds or other form of assets
Official Address	Tot. revenue and amount spent annually to meet the trust’s objective	Income & Expenditure Account Statement of the organisation of the organisation
PAN details	Income details for categories used to meet the trust’s objective	Transfer and donation details to other trusts
Assessment Year (AY)	Details of income of the institution that exceeds 15 percent of the total income.	Previous year’s voluntary contribution receipts
Registration Number	Profit reserves of the institution or organisation (not exceeding 15 percent of total income)	Previous year’s anonymous donation
Institution or Organisation’s Date of Approval
Section 10(23) sub-clause

The assessee’s accounts should mandatorily be audited, and the charitable organisation’s audit report should be submitted in form 10BB.

What is the difference between Form 10B and Form 10BB?

Though Form 10B and 10BB seem similar in hindsight, they have different purposes and applications. Both 10B and 10BB are audit reports and are concerned with the income tax of charitable or not-for-profit organisations and institutions.

Here is a table differentiating the two forms, 10B and 10BB, in detail:

	Form 10B	From 10BB
Purpose	The assessee needs to file it based on rule 17B of section 12AB.	Assesse needs to file on the basis of the rule 16CC under section 10.
Applicability	Particularly formed to regulate religious trusts and charitable organisations and organisations engaged in philanthropic work.	Regulates institutions that may or may not be charitable in nature but involved in philanthropic activities not covered under form 10B.
Inclusion	More comprehensive than form 10BB.	Less comprehensive than Form 10B.