Due date of Trust Audit report

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Yathish Acharya (Querist)
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21 June 2024 For AY 2023-24 would a trust be able to get exemption under sec 11 if the Auditor has filed form 10BB report on 30th Oct 2023 and the client e-verified the same on 8th Nov 2023. If not please provide information as to get exemption thereon.
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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 For AY 2023-24, in order for a trust to claim exemption under Section 11 of the Income Tax Act, 1961, it is important to comply with certain procedural requirements, including the filing of Form 10BB by the auditor and its verification by the trust. Here’s a detailed breakdown of the process and timeline for claiming exemption under Section 11:

1. **Form 10BB Filing by Auditor**: Form 10BB is a report filed by the auditor of the trust, certifying the details of the activities and expenditures of the trust to ensure compliance with the provisions of Section 11 and 12 of the Income Tax Act.

2. **Due Date for Form 10BB**: According to Rule 17B of the Income Tax Rules, 1962, Form 10BB must be filed by the auditor on or before the due date of filing the return of income under Section 139(1). However, for practical purposes, it is advisable to file Form 10BB well before the due date to avoid any delays.

3. **Verification by Trust**: Once Form 10BB is filed by the auditor, the trust needs to verify it using its Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) on the Income Tax Department's e-filing portal.

4. **Timeline Consideration**:
- **Filing by Auditor**: Form 10BB should ideally be filed by the due date of filing the trust’s return of income. For AY 2023-24, this due date is typically by September 30, 2023, unless extended by the tax authorities.
- **Verification by Trust**: The trust must verify Form 10BB after it is filed by the auditor. This verification should be completed promptly upon filing by the auditor to ensure compliance within timelines.

**Exemption under Section 11**: To claim exemption under Section 11, the trust must demonstrate that its income is applied or accumulated for charitable or religious purposes and that it complies with the conditions specified under Section 11 and related rules. Form 10BB plays a crucial role in substantiating these claims by providing details of the activities and application of income by the trust.

**Practical Steps**:
- Ensure Form 10BB is filed by the auditor before the due date.
- Verify Form 10BB promptly upon filing by the auditor using DSC or EVC on the Income Tax Department’s portal.
- Monitor the status of Form 10BB to ensure it is successfully verified and reflects accurately in the trust’s e-filing account.

Given your scenario where Form 10BB was filed by the auditor on October 30, 2023, and verified by the trust on November 8, 2023, it appears that both steps were completed after the ideal due date for filing the trust’s return. While the exact implications can vary, it's advisable to consult with a tax advisor or chartered accountant to determine any potential consequences and the best course of action to ensure compliance and eligibility for exemption under Section 11 for AY 2023-24.