“CBDT Allows Audit Report Rectification for Tax Exemption”

CBDT Allows Rectification of Incorrect Audit Report Forms for A.Y. 2023-24

In a recent development, the Central Board of Direct Taxes (CBDT) issued Circular No. 02/2024 dated March 05, 2024, granting a window for trusts and institutions to rectify incorrect audit report forms submitted for Assessment Year (A.Y.) 2023-24. This rectification opportunity is available until March 31, 2024, specifically for entities needing to switch between Form No. 10B and Form No. 10BB to maintain their tax exemption status.

Income Tax Exemption Criteria

Under the Income-tax Act, 1961, the income of various entities such as funds, institutions, universities, educational institutions, hospitals, and medical institutions falls under the exempt category, subject to fulfilling certain conditions specified in the Act.

Requirement of Audited Accounts

One such condition, as outlined in the Act, pertains to the requirement of getting accounts audited and furnishing the audit report in the prescribed form by a specified date. This condition applies to trusts or institutions eligible for exemption under specific sections of the Act.

Prescribed Audit Report Forms

Form No. 10B and Form No. 10BB, prescribed under Rule 16CC and 17B of the Income-tax Rules, 1962 respectively, serve as the audit report forms for trusts or institutions falling under different categories based on their income level or other criteria.

Changes in Forms

Changes in the prescribed forms were introduced vide Notification No. 7 of 2023 dated February 21, 2023, effective from April 01, 2023, for A.Y. 2023-24 and subsequent years.

Rectification Opportunity

To address this issue, the CBDT, exercising its powers under section 119 of the Act, has allowed trusts or institutions to rectify their submissions. Those who submitted Form No. 10B where Form No. 10BB was applicable, and vice versa, can now furnish the correct audit report form by March 31, 2024, for A.Y. 2023-24.

Ensuring Compliance

This move by the CBDT provides relief to trusts and institutions facing inadvertent errors in their audit report submissions, ensuring compliance with the prescribed forms and maintaining their eligibility for tax exemption.