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FAQs on Reporting of Donations in Form 10BD for Statement of Donation

faqs-reporting-of-donations-form-10bd-statement-of-donation

There are many confusions prevailing in reporting of donation amount while filing the statement of donation or Donation Return in Form 10BD by a trust or an institution as per section 80G(5)(viii)/35(1A)(i) of the Income-tax Act, 1961 read with Rule 18AB of the Income-tax Rules, 1962.


    The author has tried to summarize and consolidate various queries on the matter received through various forums for the benefit of the readers. 


    Please note that there were no clarifications issued by the income-tax department regarding these queries. The clarifications to these queries are the opinion of the author based on the interpretation of the law which may or may not be agreed upon by the readers. These are required to be construed only in the nature of guidance to the readers.



    In case any reader has any further queries or has a divergent view, they may post the same in the comment section. Many other issues regarding reporting of donation amounts in Form 10BD will be updated as and when the same comes to the notice of the author.


    This article is mainly focused on section 80G but is equally applicable to section 35 also.


    A note on the interpretation of the law requiring the furnishing of Form 10BD


    Readers are aware that the requirement of filing the ‘statement of donation’ was first introduced in the Income-tax Act by the Finance Act, 2020. For this purpose, a new clause (viii) was inserted in sub-section (5) of section 80G to provide for the furnishing of a statement of donation to the income-tax authority. 


    This was, later on, withdrawn and reintroduced in the statute in a similar manner by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. This time this provision was made applicable from 1st April 2021 or FY 2021-22. Rule 18AB provides for furnishing the requisite statement of donation in Form No. 10BD.


    Please note that this provision is placed in sub-section (5) of section 80G which provides for donations to any fund or institution approved under section 80G(2)(a)(iv) will be eligible for deduction from computing the total income of the donor under section 80G(1).


    In other words, a conjoint reading of section 80G(1), (2) and (5)(viii)/(ix) shows that the scheme of section 80G provides for deduction from the computation of the total income of an assessee for any sums paid by the assessee in the previous year as donations to any fund or institution to which section 80G applies if the institution or fund prepares the prescribed statement in the prescribed form and verified in the prescribed manner and delivers the same to the prescribed income-tax authority within the prescribed time-limit and issues a certificate of donation to the donor in this regard.


    The fact that the purpose of introducing the provisions of furnishing the statement of donation is to cross-check the deduction claimed by the donor is further fortified from the reading of the Memorandum to Finance Bill, 2020 which reads as under (emphasis supplied)-


    Filing of statement of donation by donee to cross-check claim of donation by donor


    It may further be mentioned that certain provisions of the Act provide that an exempt entity may accept donations or certain sum for utilisation towards their objects or activities in respect of which the payer, being the donor, gets deduction in computation of his income. At present, there is no reporting obligation by the exempt entity receiving donation/ any sum in respect of such donation/ sum. With the advancement in technology, it is now feasible to standardise the process through which one-to-one matching between what is received by the exempt entity and what is claimed as deduction by the assessee. This standardisation may be similar to the provisions relating to the tax collection/ deduction at source, which already exist in the Act. Therefore, the entities receiving donation/ sum may be made to furnish a statement in respect thereof, and to issue a certificate to the donor/ payer and the claim for deduction to the donor/ payer may be allowed on that basis only. In order to ensure proper filing of the statement, levy of a fee and penalty may also be provided in cases where there is failure to furnish the statement.


    Therefore, the basic rationale of introducing the concept of furnishing the statement of donation is to allow deduction under section 80G to the donor based on the information provided by the donee rather than it being introduced as anti-abusive provisions to check the anonymous donation received by the trust or institution.


    Further, the Memorandum statement to Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020 states the amendment in section 80G regarding furnishing the statement of donation in the following words.


    The proposed amendment to sub-section (5) of section 80G empowers the Board to provide by rules the statement, time period, form and manner of verification, particulars and time for delivery of correction statement for rectification of any mistake in the information furnished in the said statement. It further proposes to empower the Board to make rules with regard to the manner, particulars and time for certificate of donation.


    Hence, it can be concluded that the basic intent of the legislature for introducing the furnishing of a statement of donation is to allow the deduction to the donor under section 80G for the donations it made to the trust or the institution based on the statement filed by the donor. This will cross-check the deduction claimed by the donor under section 80G. Only actual donations given by the donor will be allowed as a deduction and thus the possibility of claiming a fake deduction under section 80G by a taxpayer will be completely eliminated.


    Despite this, an organization must try to report all the donations it has received from all the donors rather than skip some of the donations. It will help the organization in future to address any scrutiny by the income-tax department.


    In the author's view, the purpose is to prefill the return of income of the donor for the donation amount so that the deduction can be allowed to the donor on the basis of information provided by the donee.


    On the contrary, if we look at the Excel template of Form 10BD, it provides for the following unique IDs of the donor-

    ● Permanent Account Number,

    ● Aadhaar Number,

    ● Tax Identification Number,

    ● Passport number,

    ● Elector's photo identity number,

    ● Driving License number,

    ● Ration card number


    It is not clear how the ration card number or the passport number will allow the prefilling of the ITR forms. Nevertheless, the identity will help the donor to claim the deduction from his gross total income in his assessment.


    In the ‘Instructions to fill the form:’ in the notified Form 10BD, it is instructed that “In “Unique identification number of the donor”, one of the following shall be filled: 

    a. If PAN or Aadhaar number is available, one of that should be mandatorily filled and the following ID code shall be filled-

    Type of Identification Code

    Code

    PAN

    1

    Aadhaar Number

    2

    b. If neither PAN or Aadhaar is available, one of the following should be filled

    Type of Identification Code

    Code

    Taxpayer Identification Number of the country

    where the person resides

    3

    Passport number

    4

    Elector's photo identity number

    5

    Driving License number

    6

    Ration card number

    7”


    Hence, the first preference is to obtain the PAN or Aadhaar Number of the donor by the donee. If, after putting every effort to get the PAN/Aadhaar No. of the donor, the same could not be obtained or available, then only other identification number needs to be furnished.


    Further, Form 10BD also requires reporting of donations received in-kind from donors for which no deduction under section 80G is allowed to donors. The identity of donors is also required to be furnished in Form 10BD for donations received in-kind.


    Thus, it can be interpreted in another manner that, through Form 10BD, the department wants to keep a check on the anonymous donation and, thus, the identity of the donor is required to be established by the donee. Therefore, the purpose of furnishing the data of donation in Form 10BD to weed out the anonymous donation cannot be ruled out completely.


    General FAQs on Form 10BD


    What is Form 10BD or a Statement of Donation?


    Form 10BD is an annual statement of donation required to be filed by a Trust or institution or NGO which is approved under section 80G or section 35 of the Act before the income-tax authority containing the particulars of donations received by it in a particular financial year and the details of donors viz., name, address, PAN etc. of the donor.


    Who is required to file Form 10BD? 


    All Trusts or institutions or funds or NGOs whether formed as a society or a section 8 company or a Trust having approval under section 80G or section 35 is required to furnish Form 10BD.


    What is the last date or due date for filing Form 10BD?


    The Statement of Donation in Form 10BD is required to be furnished on or before the 31st May, immediately following the financial year in which the donation is received.


    Where and how to file Form 10BD


    The Form 10BD is required to be filed electronically or online on the e-filing website after logging into the e-filing account of the taxpayer.


    What are the relevant legal provisions for filing of donation return in Form 10BD


    The relevant provisions for filing a statement of donation are provided in section 80G(5)(viii) and section 35(1A)(i) of the Income-tax Act. Rule 18AB prescribes Form 10BD, procedure and the due date for furnishing the statement of donation.


    If the donor requests the donee for not providing his donation data in Form 10BD, is that can be done?


    This should be avoided. The donee shall endeavour to report all details of donations it has received during a financial year.


    Whether any mistake in Form 10BD can be rectified? Is there any provision to file a correction statement of donation in Form 10BD


    Rule 18AB provides for furnishing a correction statement of Form 10BD. Hence, any mistake in the filing of the original Form 10BD can be rectified by filing a correction return.


    Note: The functionality of filing a correction statement is not yet enabled on the e-filing website.


    How to file correction return of Form 10BD


    The procedure will be known once the functionality of filing a correction statement is enabled. 


    How to report multiple donations from the same donor in a financial year


    All the donations of each individual donor need to be aggregated and a single consolidated amount of donation for each donor needs to be reported. This is subject to the condition that the ‘Donation Type’ and ‘Mode of receipt’ are the same. 


    Hence, donation for a single donor is required to be aggregated for each category of donation type and mode of receipt.


    Illustration:


    A Trust has received the following donations during FY 2021-22-


    DateDonation received fromNarrationAmount of donation (in Rs.)
    10/04/21Mr. RakeshDonation received through NEFT1,00,000
    28/04/21Mr. KamleshCorpus donation received by RTGS3,00,000
    15/05/21XYZ LimitedGrant received for drinking water project10,00,000
    16/05/21Mr. RakeshCorpus Donation received through NEFT50,000
    25/06/21Mr. KamleshCorpus Donation received in Cash10,000
    30/08/21XYZ LimitedGrant received for livelihood project15,00,000
    10/09/21Mr. KamleshCorpus donation received by cheque2,00,000
    15/10/21Mr. RakeshDonation received through NEFT40,000
    05/02/22ABC FoundationGrant received in the bank account for milk project12,00,000
    10/03/22ABC FoundationGrant received in the bank account for milk project5,00,000

    (All the names of the donors are hypothetical)


    Based on the above data, the donations for each donor need to be reported in Form 10BD through Excel template in the following manner-


    faqs-reporting-of-donations-form-10bd-statement-of-donation


    Donors are aggregated on the basis of ‘Donation Type’ and ‘Mode of receipt’.


    Whether any return needs to be filed if no donation is received during the financial year. In other words, whether Nil Return for donation in Form 10BD is mandatory?


    Nil return is not mandatory.


    Whether an institution shall file Form 10BD if provisional approval under section 80G


    Form 10BD is required to be filed by every person having approval under section 80G or section 35. It is irrelevant whether the organization has provisional approval or regular approval.


    Hence, a provisionally approved organization having receipt of donation shall be mandatorily required to file Form 10BD.


    What is the penalty if Form 10BD is not filed or the consequences of not filing Form 10BD


    A late fee of Rs. 200 per day for each day of default will be levied if Form 10BD is filed after the due date. 


    The amount of the late fees needs to be computed from the date immediately following the due date (i.e from 1st June) to the actual date of filing of Form 10BD.


    If Form 10BD is filed on 18th June 2022, then the Late Fees will be Rs. 18 days x Rs. 200 = Rs. 3600.


    However, the amount of late fees shall not exceed the amount of donation reported in Form 10BD. Thus, if the Form 10BD is filed for receipt of donation of Rs. 3,000/-, the late fees, in the given case, will be limited to Rs. 3,000 instead of Rs. 3,600/-.


    Apart from the late fees, the Assessing Officer may levy a penalty of Rs 10,000/-. The maximum amount of penalty that can be levied is Rs 1,00,000/-.


    Technical FAQs on Form 10BD


    How to fill data in Form 10BD Excel template


    The instruction to fill donation data in the excel template of Form 10BD is detailed in this article.


    Important Points to know before filling Form 10BD Excel Template-


    1. Colum B 'Pre Acknowledgement Number' needs to be kept blank for FY 2021-22.


    2. Column F 'Unique Registration Number (URN)' shall be filled from Sl. No. 5 of the Form 10AC issued by the income-tax department for granting approval/provisional approval under section 80G. It's a 16-digit URN.


    3. Column G 'Date of Issuance of Unique Registration Number' shall be filled from Sl. No. 7 of the Form 10AC issued by the income-tax department for granting approval/provisional approval under section 80G.  It should be in mm-dd-yyyy format.


    How to upload donation data to the e-filing portal


    The reader may refer to this detailed article which guides step-by-step procedure on How to online file Form 10BD. The same is not repeated here.


    How to convert Excel template to CSV file


    Refer to this article.


    How to verify the Form 10BD


    Form 10BD needs to be verified by EVC or DSC. Refer to this article for a detailed procedure.


    FAQs on Issues in reporting of Donations in Form 10BD


    Whether FCRA donations are required to be reported in Form 10BD


    Ideally, all donations received by an organization, whether domestic donations or FCRA donations, must be reported in Form 10BD.


    This is contra to the fact that the foreign donors will not be able to claim a deduction for donation under section 80G in their home country. Further, if the foreign donor provides Indian PAN, then the same must be reported with PAN in Form 10BD. 


    While reporting the FCRA donation, the organization shall provide the ‘Taxpayer Identification Number’ of the country where the person resides” of the foreign donor in Form 10BD.

     

    The structure of Form 10BD mandates reporting of FCRA donations in Form 10BD.


    Therefore, it is advisable that the organization must obtain the tax identification number like SSA No. etc. of the foreign donors. In fact, the field ‘Taxpayer Identification Number” in Column ‘C’ of the excel template of Form 10BD is relevant for foreign donors.


    Whether Cash Donations are required to be reported in Form 10BD


    All donations received by an organization in a particular financial year need to be reported in Form 10BD whether the same is received in cash or by cheque or otherwise.


    Thus, cash donations are also required to be reported in Form 10BD. When the donation is received in cash, the ‘mode of receipt’ in the excel template shall be selected as ‘Cash’.


    Whether cash donation in excess of Rs. 2,000 needs to be reported in Form 10BD


    As stated above, all cash donations must be reported in Form 10BD. This is irrespective of the cash amount involved. Further, the full amount of donation received in cash shall be reported and shall not be limited to Rs. 2,000.


    Readers are aware that as per the provisions of section 80G, the deduction for cash donations to the donor is limited to Rs. 2,000 if the cash donation amount exceeds Rs. 2,000. But in reporting cash donations from a donor in Form 10BD, if the amount of cash donation exceeds Rs. 2,000, the gross amount of donation received in cash needs to be reported and the reporting should not be limited to Rs. 2,000.


    Illustration


    DateDonation received fromNarrationAmount of donation (in Rs.)
    10/04/21Mr. RakeshDonation received in cash1,00,000

    In Form 10BD, the amount of donation received from Mr. Rakesh should be reported at Rs. 10,000 although he will be entitled to a deduction under section 80G for Rs. 2,000 only.


    Note: There is a restriction for receiving an amount of donation from a single donor in a financial year in excess of Rs. 2,00,000/-.  Hence, an organization cannot receive donation of more than Rs. 2 Lakh in cash from a single donor in a financial year. Any contravention thereof shall attract a 100% penalty.


    Whether anonymous donations are required to be reported in Form 10BD


    As per section 115BBC, "anonymous donation" means any voluntary contribution where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed.


    In the absence of any details of the donor, anonymous donations cannot be reported. However, the limit of anonymous donation of Rs. 1,00,000 or 5% of total donation receipts, whichever is higher, shall be kept in mind while preparing the reconciliation statement for any difference in the amount of donation reported in Form 10BD and in the ITR/audit reports.


    Whether grants are required to be reported in Form 10BD


    Any donations whether received in the form of corpus donation or general donation or grant are required to be reported in Form 10BD. Thus any grant received by any organization is squarely required to be reported in Form 10BD.


    While reporting the grant in Form 10BD, the ‘Donation Type’ shall be selected as ‘Specific grant’ in the excel template.


    Whether donations received from the government are required to be reported


    Reporting all nature of donation is mandatory, except for anonymous donations. It is immaterial who is the donor. Thus, donations received from government departments are also required to be reported.


    Normally, donations received from the government are in the nature of grants and, thus, should be reported accordingly.


    How to report donations received from a person who does not have any PAN or other ID number


    An organization must put every effort to obtain PAN or other IDs from the donor, otherwise, the same may amount to anonymous donation. At least, name and address of the donor should be there in the records of the organization to avoid them being termed as anonymous donation.


    The organization must maintain a proper reconciliation statement of donations reported in Form 10BD and donations reported in annual audited accounts or ITR form. Any discrepancy may invite scrutiny from the income-tax department.


    How to report grants received from government departments having no PAN


    In many cases, grants are received from government departments where PAN is not available. In this case, the same could not be reported and should be duly captured in the reconciliation statement. A confirmation to the effect that the department does not have a PAN should be obtained from the respective department.


    In case any other ID number of the government department is available then such grant should be reported with that ID number by selecting the ‘Tax Identification Number’ ID code in the excel template.


    It is also seen that in some cases, government departments releasing grant money do have PAN. This needs to be confirmed.


    Whether donations received in-kind requires reporting in Form 10BD


    The structure of Form 10BD requires reporting of donations received in-kind also.


    Please note no deduction under section 80G is allowed to donors for donations made in-kind.


    How to value the amount of donation received in Kind


    There is no basis of valuation of donations received in-kind is prescribed in the Income-tax Act or Rules. However, the same should be measured on a reasonable and fair basis. The value of donations received in-kind as recorded in the books of accounts of the organization needs to be reported in Form 10BD.


    For donations received in-kind, the ‘mode of receipt’ should be selected as ‘Kind’ in the excel template.


    How the donation received in the ‘donation box’ needs to be reported


    The donation received in ‘donation box’ amounts to anonymous donation and hence could not be reported.


    Should we include CSR grants in Form 10BD


    Yes. Donation out of CSR fund also amounts to ‘donation’ and hence required to be reported in Form 10BD. In fact, it is of utmost importance and the CSR funding company will definitely ask for the certificate of donation in Form 10BE.


    Whether donations received from Foundations like ABC Foundation should be reported


    Yes. Donations received from foundations require reporting in Form 10BD.


    How to report joint donations?


    Joint donations should be reported in the respective PANs of the donors in the specified proportion. In the absence of any instruction as regards proportion from the donor, the same needs to be proportioned equally.


    What to do if details of donors are not available?


    The organization has to put every effort to obtain the details of the donors else, the same would be treated as anonymous donation. Despite this, if no details are available, the same could not be reported in Form 10BD.


    How to show donations from persons having name and address but no PAN or other IDs


    It is difficult to show such donations in Form 10BD. It is to be seen whether Form 10BD will be accepted with PANNOTAVBL as ID number for ID code 'PAN' like TDS returns. In case readers have faced this case, they may share their experience in the comment section.


    How to show penny or small donations in Form 10BD


    Small or penny donations are also required to be shown or reported in Form 10BD. There is no threshold limit for reporting donations received is prescribed. Hence, every amount of donation irrespective of its quantum needs to be shown in Form 10BD.


    This is subject to the details of the donor viz., name, address and PAN or other ID numbers is available with the donee and money receipt is issued to those donors.


    How the reporting of the donation amount will be used to cross-check with the donation amount reported in ITR/annual audited accounts


    The amount of donation reported in Form 10BD may be subject to cross-check with the amount of donation reported in annual audited accounts or ITR form.


    In case there is a difference or mismatch between the amount of donation as reported in Form 10BD and in the ITR forms or audit report, the organization shall prepare and keep a reconciliation statement which shall be submitted to the tax authority if asked for.


    The difference on account of any anonymous donation must be as per the procedure specified in the income-tax law. Further, where donation could not be reported for want of any ID number, a confirmation should be obtained from the donor to that effect.


    Any unexplained differences in the amount of donation may be treated as ‘undisclosed’ income or anonymous donations in extreme situations.


    Reporting of Other income of a trust in Form 10BD


    Whether interest or other income of the organization having approval under section 80G needs to be shown in Form 10BD


    These incomes are not in the nature of donation and hence need not be reported or shown in Form 10BD.


    Whether an approved society receiving membership fees needs to be disclosed in Form 10BD on which GST is charged


    Membership fees received by a society having section 80G approval are not donation income and hence need not be shown in Form 10BD. It is immaterial whether GST is charged or not on such membership fees.


    Only income in the nature of donation needs to be shown or reported in Form 10BD.


    The same rule applies to conference fees or subscription fees received by such a society or organization.


    Whether advertisement receipt for publishing advertisement on the souvenir of the organization needs to be shown in Form 10BD


    No. Income from advertisement is not a donation and does not require any reporting in Form 10BD.


    Whether sponsorship fees will come in Form 10BD


    No, as it is not donation income.


    Concluding Remarks


    The author has tried to put all the queries related to reporting of donations in Form 10BD. Readers may also post their query in the comments section in case the same is not covered here or covered here but needs more clarification.


    Further, if anyone carries a different or divergent view on any of the covered queries, the same may be posted in the comments section. The author will incorporate the same in the main article if found useful.


    It is further clarified and reiterated that the clarifications have been made based on the author’s interpretation of the law on the matter of reporting donations in Form 10BD.


    Read Also:

    An Insight into Amendments for Charitable Trusts –Budget 2020

    Statement of Donation in Form No. 10BD || Certificate of Donation in Form 10BE || Section 80G(5) and Rule 18AB

    How to File Form 10A for Approval under Section 80G

    Understanding Form 10A, Form 10AB, Form 10AC, Form 10AD for Section 12AB, Section 80G, Section 35, Section 10(23C)

    Section 12AB and Form 10A: Procedure of Registration of a Trust and NGO 

    How to File Form 10A on New E-Filing Portal

    How to e-Verify Form 10A with DSC on New e-Filing Portal

    Understanding Form 10BD on Statement of Donation and Form 10BE on Certificate of Donation u/s 80G/35 and Rule 18AB

    How to File Form 10BD Online || Donation Return || Statement of Donation



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    4 Comments

    1. Sir ji a charitable hospital collected consultation n IPD charges, whether need to report?

      ReplyDelete
      Replies
      1. These are in the nature of income and hence not required to be reported in Form 10BD

        Delete