Which ITR form must a trust file with Form 10B?

Charitable trusts must file ITR-7. Form 10B must be uploaded on the Income Tax portal before ITR-7 is submitted.

What happens if a trust fails to file Form 10B on time?

Late filing can result in denial of Section 11 exemption for that year, making the income taxable, plus Section 271B penalty of up to ₹1.5 lakh.

Form 10B – Audit Report for Charitable & Religious Trusts | Filing Services | NDS Avla

Form 10B – Audit Report for Charitable & Religious Trusts under Section 12A

Q: What is the 85% application rule for trusts?

A registered trust must apply at least 85% of its income for charitable/religious purposes in the financial year to claim exemption under Section 11(1)(a). Shortfall can be accumulated under Section 11(2) by filing Form 10 with the ITR.

Expert Form 10B Preparation, CA Certification & Trust Income Tax Audit Compliance

Form 10B is the audit report that must be filed by charitable and religious trusts and institutions registered under Section 12A/12AA/12AB of the Income Tax Act, when their total income (before claiming exemption) exceeds ₹5 crore in a financial year. The Form 10B audit must be conducted by a Chartered Accountant and must be uploaded on the Income Tax portal along with the trust's income tax return. The deadline for filing Form 10B is the same as the tax audit deadline — typically September 30 following the end of the financial year.

The Form 10B audit provides comprehensive information about the trust's income, expenditure, application of funds, accumulations under Section 11(2), investments, and compliance with registration conditions. Trusts whose income does not exceed ₹5 crore file the simpler Form 10BB instead. Our services cover the complete trust audit and compliance lifecycle, including Form 10BD filing for donor reporting and TDS compliance for trusts paying salaries or professional fees.

Form 10B vs Form 10BB — Which Applies?

Parameter	Form 10B	Form 10BB
Applicable to	Trusts/institutions with total income exceeding ₹5 crore	Trusts/institutions with total income up to ₹5 crore
Registration	Section 12A/12AA/12AB registered entities	Section 12A/12AA/12AB registered entities
Also applicable to	Section 10(23C) approved funds/institutions (higher threshold)	Section 10(23C) approved funds/institutions (lower threshold)
Scope	Detailed — covers income sources, accumulations, investments, compliance	Simplified — basic income, application, accumulation details
Filing Deadline	September 30 (same as tax audit)	September 30 (same as tax audit)
Who Certifies	Practicing Chartered Accountant	Practicing Chartered Accountant

Our Form 10B Services

Trust Income & Expenditure Audit

Complete audit of the trust's receipts, income, expenditure, and application of funds to verify correct application of at least 85% of income for charitable/religious purposes as required under Section 11(1).

Accumulation Advisory (Section 11(2))

Advisory on accumulating income beyond the current year under Section 11(2) — filing Form 9A/10 for accumulations — and verifying that accumulated funds are deployed within 5 years as required.

Corpus Fund Verification

Verification of corpus donations received and their separate accounting — ensuring corpus is not treated as application of income and is invested in specified modes under Section 11(5).

Specified Investment Compliance

Verification that all trust funds and investments comply with the specified modes under Section 11(5) — government securities, post office savings, scheduled bank FDs, and other prescribed investments.

Form 10B Upload & ITR Filing

CA certification, digital signing, and upload of Form 10B on the Income Tax e-filing portal, integrated with the trust's income tax return (ITR-7) filing for the assessment year.

Registration Compliance Check

Verification that the trust continues to comply with conditions of its Section 12AB registration — including no violation of objects, no private benefit, and no diversion of income for non-charitable purposes.

Frequently Asked Questions

What is the 85% application rule for trusts and how does Form 10B verify it?

Under Section 11(1)(a), a registered trust is entitled to exemption from income tax only on the income that is "applied" for charitable or religious purposes in India during the financial year. "Applied" means actually spent on the charitable objects of the trust — not merely set aside or committed. The trust must apply at least 85% of its income (calculated on the income received basis) for charitable purposes. If the trust cannot apply 85% due to reasonable cause, it can accumulate the shortfall under Section 11(2) by filing Form 10 within the ITR filing due date. Form 10B audits and certifies the actual application percentage, reasons for shortfall if any, and accumulation details.

Which income tax return (ITR) form must a trust file along with Form 10B?

Charitable and religious trusts registered under Section 12A/12AB must file ITR-7 (Return for Persons including Companies required to furnish return under Sections 139(4A), 139(4B), 139(4C), or 139(4D)). The Form 10B audit report must be uploaded on the Income Tax e-filing portal before the ITR-7 is submitted. Section 139(4A) mandates return filing for trusts whose total income before exemption exceeds the basic exemption limit. ITR-7 requires detailed schedules including income from property held for charitable purposes, voluntary contributions, accumulations, and investments.

What happens if a trust fails to file Form 10B by the deadline?

Failure to file Form 10B by the audit deadline (September 30) can result in denial of exemption under Section 11 for the relevant assessment year. The trust's income would then be taxable at the applicable rate. Additionally, the AO may levy a penalty under Section 271B (failure to get accounts audited) of the lower of 0.5% of total income or ₹1.5 lakh. Late filing with a valid reason may be condoned through a condonation application. Trusts should prioritize timely Form 10B filing to protect their exemption status.

Can a trust accumulate income exceeding the 85% application threshold?

Yes. Under Section 11(2), a trust can accumulate income beyond the 85% application requirement for a specific purpose for up to 5 years by filing Form 10 (statement of accumulation) with the income tax return by the due date. The accumulated funds must be invested in specified modes under Section 11(5) and must be applied for the specific purpose within 5 years. If not applied within 5 years, the accumulated amount is deemed income of the year in which the 5-year period expires. Form 10B audits and certifies the validity and compliance of all such accumulations.

Trust Income Exceeds ₹5 Crore? File Form 10B On Time With Our Expert CAs.

We conduct the complete Form 10B audit — income verification, 85% application check, accumulation compliance, investment verification — and file the certified report with your ITR-7.