CAP’s FAQ on Income tax Form 10BD & 10BE
Since the last few weeks, we have been receiving several queries regarding filing ‘Donor Information’ in online Form 10BD and issuing of Donor Certificate in Form 10BE to the Donor/s. To address these concerns, we at the Centre for Advancement of Philanthropy (CAP) have compiled this dossier of Frequently Asked Questions (FAQ) for the benefit of many others who may still be concerned or confused with regard to this new compliance requirement by the Income Tax department.
Q 1. Is filing of online Form 10BD mandatory for every charitable trust or institution?
A 1. Yes, Income tax has made filing of Statement of Donations received during the previous financial year (in Form 10BD) mandatory.
Q 2. If my trust or institution has tax exemption certificate u/s 12AA (now 12AB) but has not applied for nor has tax deduction certificate for donors, must Form 10BD still be filed?
A 2. 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.
Q 3. What is the deadline or due date for this new compliance?
A 3. The statement of donations for Financial Year 2021-22 is required to be filed by 31st May 2022.
Q 4. What is the step-by-step process for filing this form?
A 4. We suggest that this process be handled by an experienced professional accountant in your organization or by your Chartered Accountant / Auditor.
- Access the Income Tax Portal using your organization’s Income Tax Login ID and Password which you use for filing your Income tax returns;
- Form 10BD should then show up online under tab “E-File”;
- Under E-file, click on “Income Tax Forms” and search for Form 10BD;
- The format in which details have to be filled will be downloaded from a link provided in the Form itself using “Download Template” in Part B of the form;
- The template mentioned hereabove is in excel format;
- The excel template can be downloaded by clicking: https://www.incometax.gov.in/iec/foportal
- Donor details need to be filled as mentioned in the “Requirement” section above;
- The excel file should be saved and converted to .csv file online through an external portal;
- The converted file needs to be downloaded and then uploaded again in the link provided in the Form 10BD;
- In case of any errors in the form, the errors will be indicated in Part B online Form;
- The Preview of the form can be viewed and verified online. Once this is done, the submission is complete;
- E-verification of Form 10BD is mandatory either through DSC or EVC-4. Therefore, please ensure that details of Principal officer or Authorized Signatory is up to date in the ‘My Profile’ before Submission of the form.
Q 5. Is Certificate of Donation (for Donor) in Form 10BE also mandatory?
A 5. Yes, it is mandatory.
After filing of Statement of Donations in Form 10BD, one can download and issue Certificate of Donations in Form 10BE which will contain details of the charitable trust or institution like PAN and Name of the charitable trust or institution, the approval numbers u/s 80G or 35(1) along with details of the donations and donor.
Q 6. What if my organization fails to comply or misses the due-date of 31st May?
A 6. Every organization having 80G or 35(1) is mandated to comply with the filing of Form 10BD & Form 10BE and failure to comply will attract a fee of Rs.200/- per day of delay as per newly inserted section 234G.
Apart from the fee for delay in furnishing statement of donations in Form 10BD, failure to file such statement will also attract penalty u/s 271K, which shall not be less than Rs.10,000/- and which may extend up to Rs.1,00,000/-.
Q 7. What if my organization has not received a single donation or grant during the financial year? Should we be filing for Nil donation?
A 7. If your organization has not received a single donation or grant during the financial year you need not file Form 10BD. The portal so far does not seem to accept Nil declaration.
Q 8. Must every single donation or grant received during the previous financial be reported in Form 10BD?
A 8. No. In online Form 10BD only upload information or details of donors who are interested in enjoying tax deduction u/s 80G or u/s 35(1) of Income tax.
Q 9. We receive a lot of retail donations of small amounts, including through crowd funding platforms, where donors do not provide nor bother to give PAN details. Should this be a cause of worry or concern?
A 9. It should not be cause of worry to your organization. If you do not have the donor’s PAN, your donor will not be able to enjoy tax deduction u/s 80G or u/s 35(1). If the donor is interested in availing tax deduction, he/she should provide his/her PAN so that details of donations made can get auto-filled in his/her ITR form for tax deduction.
To reiterate, the tax deduction will be pre-filled in the donor’s Income Tax Return (ITR), similar to the way TDS is retrieved, provided the person deducting tax at source has filed a TDS return with appropriate particulars.
Q 10. We also collect donations through donation cash boxes which we have installed at a few shopping malls? Should we report these donations in Form 10BD?
A 10. No. These collections would be considered as anonymous donations.
Kindly note that according to Section 115BBC(1) of Income Tax Act 1961, anonymous donations received by a charitable trust or institution are taxable at the rate of thirty percent, if the aggregate anonymous donations exceed INR one lakh rupees or five per cent of the total donations received during the fiscal year, whichever is higher.
Q 11. How can we be sure that only details of donors seeking tax deduction should be uploaded and not every single donation received by our organization?
A 11. Form 10BD clearly says: “Statement of particulars to be filed by reporting person under clause (viii) of sub-section (5) of section 80G and clause (i) to sub-section (1A) of section 35 of the Income-tax Act, 1961“. Thus, in our opinion, statements are to be filed by the Assessee Trust, Society or Section 8 company only for donors seeking/wanting tax deduction u/s 80G(5)(viiii) and 35(1A).
The intent of legislation here is to minimize fictitious claims to tax deductions u/s 80G and 35(1)
Q 12. Should corpus donations and grants given for specific purposes also be reported in Form 10BD?
A 12. Please see Form 10BD https://incometaxindia.gov.in/Forms/IncomeTax%20Rules/103520000000080975.pdf
Under 5. It asks: “Donation type”, one of the following needs to be selected:
- Specific grant
Q 13. A donor has donated a sum of Rs. 50,000/- to our organisation, but by cash and not cheque or electronic transfer. How do we report this donation?
A 13. As you may be aware, from Financial Year 2017-18 onward, any donations made in cash exceeding Rs. 2,000/- is not be allowed as a deduction u/s 80G(5D). Donations above Rs 2,000 should be made in any mode other than cash to qualify as a deduction under Section 80G. Prior to Financial Year 2017-18, the limit of donation in cash was Rs 10,000/-
Thus, the donor who has donated a sum of Rs. 50,000/- to your organization by cash cannot avail tax deduction u/s 80G and consequently details of this donor need not be uploaded in Form 10BD.
Q 14. What if donations that are reported in our Annual Return in ITR-7 do not match with donations that we report in Form 10BD?
A 14. This is bound to happen and should not be cause for concern. While in ITR-7 all donations and grants will be reported, regardless whether the donor is eligible for tax deduction or not, Form 10BD will only capture details of donors interested in or wanting to availing tax deduction u/s 80G or u/s 35(1).
Q 15. We have a donor who has donated a certain sum of money but has specifically told us that he is not interested in claiming tax deduction u/s 80G. Should we still report his donation in Form 10BD?
A 15. No. If the donor has specifically informed and instructed your organization that he is not interested in claiming tax deduction u/s 80G you must respect his wishes and not report it in Form 10BD.
Q 16. Should we report grants received from Indian grantmaking foundations in Form 10BD?
A 16. You need to ask this question to these foundations. Usually, these Indian grant making foundations are tax exempt and do not need to avail tax deductions u/s 80G or u/s 35(1). However, in case the foundation is not tax exempt it may want to avail tax deduction and ask your organization to upload details of the grant in Form 10BD.
Q 17. Should CSR grants received from companies be reported in Form 10BD?
A 17. Once again ask this question to the company. If the company is interested in availing tax deduction u/s 80G or u/s 35(1), please collect details, particularly the company’s PAN and upload information in Form 10BD.
Q 18. Should foreign contributions received from a ‘foreign source’ under FCRA 2010 also be reported in Form 10BD?
A 18. No, unless the donor is an OCI giving from his taxable income in India and wants to avail tax deduction u/s 80G or u/s 35(1).
Q 19. Should we request every donor to furnish contact details and PAN?
A 19. In our opinion it would be very desirable to do so. If the donor is keen on availing tax deduction, PAN, address and other such details should be obtained. If neither address nor PAN of the donor is available it could be deemed as anonymous donation by the Income Tax department.
Noshir H. Dadrawala