Audit under the Trust Act — governance for charitable purpose.

Form 10B is the audit report for charitable trusts and institutions registered under Section 12A/12AB whose total income exceeds the basic exemption limit. Form 10BB applies to certain trusts and educational or medical institutions under Section 10(23C). Both forms are certified by a Chartered Accountant and verify application of income, accumulation, and compliance with exemption conditions.

A charitable trust must apply at least 85% of its income in India for charitable or religious purposes during the relevant year to claim exemption under Section 11. If less than 85% is applied, the trust can either accumulate the shortfall by filing Form 10 (for up to five years for specified purposes), or pay tax on the unapplied portion. Tracking and certifying this 85% threshold is a core part of the trust audit.

Section 12A (now 12AB) registration grants income tax exemption to the trust itself on income applied for charitable or religious purposes. Section 80G registration is separate — it allows donors making contributions to the trust to claim a deduction on their own income tax return. Most trusts hold both registrations, and both must be renewed periodically under the current regime.

Any trust, society, or Section 8 company registered or holding prior permission under the Foreign Contribution Regulation Act, 2010 (FCRA) and receiving foreign contributions must get its FCRA accounts audited annually and file Form FC-4 with the Ministry of Home Affairs. The audit covers receipt, utilisation, and balance of foreign contributions, the dedicated FCRA bank account, and compliance with FCRA conditions.

Public trusts registered with the Charity Commissioner under the Maharashtra Public Trusts Act, 1950 must maintain books of account and get them audited annually if the gross annual income exceeds the prescribed threshold. The audit report is filed with the Charity Commissioner in Schedule IX-C along with the annual statement of accounts and Schedule VIII budget statement.

Form 10BD is the statement of donations that every Section 80G-registered trust must file with the Income Tax Department by 31 May each year, reporting donations received during the previous financial year. After filing Form 10BD, the trust issues Form 10BE — the donation receipt certificate — to each donor. Donors can claim Section 80G deduction only on the basis of Form 10BE issued to them.

If the audit report is not filed by the due date, the trust risks losing its exemption under Section 11/10(23C) for that year, making the entire income taxable. Lapse in 12AB or 80G renewal can suspend tax-exempt status and disqualify donor deductions. Non-compliance with state Trust Act audit obligations can attract Charity Commissioner penalties and ineligibility for grants, CSR funding, and government schemes.