What Is Income Tax for a Trust?
In India, charitable and religious trusts are required to file an Income Tax Return (ITR) every year to claim tax exemptions under the Income Tax Act, 1961. Trusts registered under Section 12A/12AB and approved under Section 80G must comply with specific income application and audit requirements.
If a trust’s income exceeds the basic exemption limit, it must also undergo an audit and file Form 10B, which is a mandatory audit report certified by a Chartered Accountant.
Types of Trusts Required to File Income Tax Return
Income tax filing applies to:
- Charitable trusts
- Religious trusts
- Educational trusts
- Medical trusts
- NGOs and non-profit organizations
Both registered and provisionally registered trusts must file returns.
Applicable ITR Form for Trust
- ITR-7 is mandatory for:
- Trusts
- NGOs
- Institutions claiming exemption under Sections 11, 12, 10(23C)
What Is Form 10B Audit?
Form 10B is an audit report required to be filed online when:
- Total income of the trust exceeds the basic exemption limit
- Trust claims exemption under Sections 11 & 12
The form must be:
- Prepared and certified by a Chartered Accountant
- Filed before filing ITR-7
Due Dates for Trust Return & Form 10B
- Form 10B: On or before the due date of ITR filing
- ITR-7 (Audit cases): 31st October
- ITR-7 (Non-audit cases): 31st July
(Due dates are subject to extension by the government.)
Documents Required for Trust ITR & Form 10B
- PAN of the trust
- Trust deed
- Registration certificate (12A/12AB)
- 80G approval (if applicable)
- Financial statements (P&L, Balance Sheet, Receipts & Payments)
- Details of income application
- Bank statements
- Audit report (Form 10B)
- Digital Signature Certificate (DSC)
Step-by-Step Process for Filing Income Tax – Trust Return & Form 10B
Step 1: Prepare Trust Accounts
Prepare:
- Income & Expenditure Account
- Balance Sheet
- Receipts & Payments Account
Ensure:
- At least 85% of income is applied toward charitable purposes
- Any accumulation is properly documented
Step 2: Check Audit Applicability
Audit under Form 10B is mandatory if:
- Trust income exceeds exemption limit
- Exemption under Sections 11 & 12 is claimed
Step 3: Appoint Chartered Accountant
- Appoint a CA for audit
- Assign CA on the income tax portal
Step 4: CA Prepares & Files Form 10B
- CA audits trust accounts
- Fills Form 10B online
- Digitally signs using DSC
- Submits Form 10B on the portal
⚠️ Form 10B must be filed before ITR-7
Step 5: Compute Taxable Income
- Calculate total income
- Verify application of income
- Adjust disallowed expenses
- Compute surplus, if any
Step 6: File ITR-7 Online
- Login to income tax portal
- Select ITR-7
- Enter trust details, income & exemption data
- Validate audit details
Step 7: Pay Tax (If Applicable)
- Pay self-assessment tax (if any)
- Enter challan details
Step 8: Submit & Verify ITR
- Submit ITR-7
- Verify using:
- DSC
- EVC
ITR is invalid without verification.
Common Mistakes to Avoid
- Filing ITR-7 without Form 10B
- Incorrect income application calculation
- Late filing of audit report
- Mismatch between audit report & return
- Missing registration details
Benefits of Proper Trust Compliance
- Retain tax-exempt status
- Avoid cancellation of registration
- Smooth grant & funding approvals
- Transparent financial records
- Protection from penalties & notices
Why Choose Saving Mantra for Trust ITR & Audit?
- CA-assisted Form 10B audit
- Accurate ITR-7 filing
- Compliance with 12AB & 80G norms
- End-to-end digital handling
- Notice & scrutiny support
Disclaimer
This blog is for informational purposes only and does not constitute legal, financial, or tax advice. Income tax provisions applicable to trusts are subject to amendments and depend on individual circumstances. Saving Mantra recommends consulting a qualified Chartered Accountant or tax professional before filing trust returns or Form 10B audit.