CBDT vide Notification No. 96/2022 dated 17.08.2022 in G.S.R. 632(E) through Income-tax (25th Amendment) Rules, 2022 has amended Rule 17 of the Income-tax Rules, 1962 (Rules) and Form No. 10 related to furnishing of information of the accumulation of income for incorporating the changes introduced by the Finance Act 2022 which inserted a new Explanation 3 to the third proviso of Section 10(23C) of the Income-tax Act, 1961 (‘Act’).
Under the provisions of the Act, a trust or institution is required to apply 85% of its income during any previous year. However, if it is not able to apply 85% of its income during the previous year, it is allowed to accumulate such income for a period not exceeding 5 years as per the following provisions, namely:
(i) sub-section (2) of section 11 of the Act for the trusts or institution registered under section 12A of the Act; and
(ii) third proviso to clause (23C) of section 10 of the Act for trusts or institution approved under section 10(23C) of the Act.
However, the accumulation of income, as per the provisions of sub-section (2) of section 11 of the Act is allowed subject to the fulfilment of certain conditions while there are no such conditions specifically provided under the third proviso to clause (23C) of section 10 of the Act.
Finance Act, 2022 has inserted Explanation 3 to the third proviso to clause (23C) of section 10 of the Act to provide that for the purposes of determining the amount of application under this proviso, where 85 per cent of the income referred to in clause (a) of the third proviso, is not applied, wholly and exclusively to the objects for which the trust or institution approved under section 10(23C) is established, during the previous year but is accumulated or set apart, either in whole or in part, for application to such objects, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely:—
(a) such person furnishes a statement in the prescribed form and in the prescribed manner to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years;
(b) the money so accumulated or set apart is invested or deposited in the forms or modes specified in sub-section (5) of section 11; and
(c) the statement referred to in clause (a) of Explanation 3 is furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year.
These accumulation-related conditions are similar to conditions specified in Section 11 of the Act.
Rule 17 of the Rules provides for the furnishing of Form 10 and Form 9A. If a trust or institution is not able to apply 85% of its income during previous year, it can accumulate the shortfall to be used for religious or charitable purposes within the next 5 years. This accumulation is allowed if the trust or institution informs the assessing officer by furnishing Form No. 10 about the purpose of the accumulation and the period for which the income is being accumulated. This Form No. 10 needs to be furnished online electronically before the expiry of the time limit allowed to furnish the return of income under section 139(1).
Now, the Board has amended Rule 17 to prescribe furnishing of Form No. 10 by a trust or institution approved under section 10(23C) of the Act similar to a trust or institution registered under section 12A of the Act.
Form No. 10 has also been amended for incorporating the necessary changes.
Read the full text of CBDT Notification No. 96/2022 dated 17.08.2022 on Filing of Form No. 10 for accumulation-related conditions u/s 10(23C)
MINISTRY OF FINANCE
(Department of Revenue)
[CENTRAL BOARD OF DIRECT TAXES]
NOTIFICATION
New Delhi, 17th August, 2022
INCOME-TAX
G.S.R. 632(E).—In exercise of the powers conferred under clause (a) of Explanation 3 to the third proviso to clause (23C) of section 10 and clause (a) of sub-section (2) of section 11 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Incometax Rules, 1962, namely:—
1. Short title and commencement. (1) These rules may be called the Income-tax (25th Amendment) Rules, 2022.
(2) They shall come into force from 1st day of April, 2023.
2. In the Income-tax Rules, 1962 (hereinafter referred to as principal rules), for rule 17, the following rule shall be substituted, namely:-
“17. Exercise of option etc. under Explanation 3 to the third proviso to clause (23C) of section 10 or section 11.– (1) The option to be exercised in accordance with the provisions of the Explanation to sub-section (1) of section 11 of the Act in respect of income of any previous year relevant to the assessment year beginning on or after the 1st day of April, 2016 shall be in Form No. 9A and shall be furnished before the expiry of the time allowed under sub-section (1) of section 139 of the Act for furnishing the return of income of the relevant assessment year.
(2) The statement to be furnished to the Assessing Officer or the prescribed authority under clause (a) of the Explanation 3 to the third proviso to clause (23C) of section 10 of the Act or under clause (a) of sub-section (2) of section 11 of the Act or under the said provision as applicable under clause (21) of section 10 of the Act shall be in Form No. 10 and shall be furnished before the expiry of the time allowed under sub-section (1) of section 139 of the Act, for furnishing the return of income.
(3) The option in Form No. 9A referred to in sub-rule (1) and the statement in Form No. 10 referred to in sub-rule (2) shall be furnished electronically either under digital signature or electronic verification code.
(4) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall—
(i) specify the procedure for filing of Forms referred to in sub-rule (3);
(ii) specify the data structure, standards and manner of generation of electronic verification code, referred to in sub-rule(3), for purpose of verification of the person furnishing the said Forms; and
(iii) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to Forms so furnished.”.
3. In the principle rules, in the APPENDIX, for Form No. 10, the following Form shall be substituted, namely:-
“FORMNo.10
[See rule 17(2)]
Statement to be furnished to the Assessing Officer/Prescribed Authority under clause (a) of the Explanation 3 to the third proviso to clause (23C) of section 10 or under clause (a) of sub-section (2) of section 11 of the Income-tax Act, 1961
To
The Assessing Officer/Prescribed Authority,
…………………………………………………
………………………………………………...
I,,…………………………………on behalf of..........................................................................[name of the fund /institution / trust / any university / other educational institution /any hospital / other medical institution/association having Permanent Account Number ……………… hereby bring to your notice that it has been decided by a resolution passed by the trustees/governing body/management, by whatever name called, on………………….(dd/mm/yyyy) that, out of the income of the fund /institution / trust / any university / other educational institution /any hospital / other medical institution /association for the previous year, relevant to the assessment year 20xx….-20xxx…., an amount of Rs…….. which is ……….. per cent of the income of the fund /institution / trust / any university / other educational institution /any hospital / other medical institution/association for the said previous year, shall be accumulated or set apart for carrying out the purposes of the fund /institution / trust / any university / other educational institution /any hospital / other medical institution/association.
The details of the amount, the purpose and period of the proposed accumulation or setting apart is as under:-
2. The amount so accumulated or set apart has been invested or deposited in any one or more of the forms or modes specified in sub-section (5) of section 11 of the Income-tax Act, 1961.
3. It is further brought to your notice that the said………………….[name of the fund /institution / trust / any university / other educational institution /any hospital / other medical institution/association] had in respect of an assessment year preceding the relevant assessment year given the statement regarding accumulation or setting apart of an amount as required under clause (a) of the Explanation 3 to the third proviso to clause (23C) of section 10/ clause (a) of sub-section (2) of section 11 of the Income-tax Act, 1961 [strike off whichever is inapplicable] as detailed below:
4. It is also brought to your notice that, out of incomes detailed in 3 above, due to the order/injunction of the court the income as detailed below could not be applied for the purpose for which it was accumulated or set apart:-
Date: ……………….
#Signature………………………
Designation ……………….……
Address……………….………
Notes:
1. #This statement should be signed by a trustee/principal officer.
2. @For section code please fill either of the following codes:
[Notification No. 96/2022/ F.No. 370142/34/2022-TPL]
NEHA SAHAY, Under Secy.
Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969(E) dated the 26th March, 1962 and last amended vide notification number G.S.R. 622(E). dated 10thAugust, 2022
Download CBDT Notification No. 96/2022 dated 17.08.2022 on Filing of Form No. 10 for accumulation-related conditions u/s 10(23C) in PDF format
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