NGOs should exercise due-diligence while filing tax returns this year.

Readers may be
aware that for Assessment Year 2018-19 (Financial Year 2017-18) the Income tax Return
in Form ITR-7 has been substantially revised. 

In order to claim tax exemption
for the fiscal year 2017-18, all mandatory criteria laid down by the tax
authorities must be fulfilled and the Return should be carefully filled with
all the required details. 

We recommend that this function is not left to just
your chartered accountant or statutory auditor. 

The Governing Board and
Management of the trust or institution should also take active interest in
ensuring that full and accurate information is submitted.

Please ensure the following compliance:

1. The return of
income in the prescribed Form ITR-7 has to be e-filed on before the due date
mentioned under section 139(1) (i.e. 30th September).

2. Audit report
in Form 10 B also should be e-filed along with the above stated return.

3. To claim
benefit of ‘deemed application’ under Section 11(1), Form 9 A has to be e-filed
before due date mentioned under Section 139(1) (i.e. 30th
September).

This form should
be signed by a trustee or principal officer of the trust.

What is “Deemed application u/s 11(1) and when e-filing Form 9A is
necessary?

According to
Explanation 2 to Section 11(1), if in the previous year, a charitable
organization is not able to utilize 85% of its income, due to the fact that
such income was accrued but not received in the previous year or for any other
reason (e.g. received towards the end of the fiscal year) then the organization
has an option to apply such income in the year, immediately following the year
of accrual of income.

4. To claim
benefit of accumulation under u/s 11(2), Form 10 has to be e-filed before
due date mentioned under Section 139(1) (i.e. 30th September).

This form should
be signed by a trustee or principal officer of the trust.

Why and when should Form 10 be filed?

If the trust or
institution is unable to apply at least eighty five per cent of its income in
the previous year it may accumulate or set apart the unspent income for up to a
maximum of five years.

In Form 10, the
amount, the purpose for which the amount is accumulated or set apart, as also
the period of accumulation/setting apart must be stated.

5. If in any of
the projects/institutions run by the trust, one of the charitable purpose is
“Any other object of general public utility” and the activity is in
the nature of trade, commerce or business or service as referred to in the proviso
to Section 2(15), then provide the aggregate annual receipts from such activity
and its percentage in Schedule Part A.

6. In order to
claim exemption under section 11, all incomes must be entered first in Schedule
AI.

7. The details of
projects/institutions run by the trust and details of registrations or approvals
have to be necessarily provided in Schedule Part A.