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20 May2022
  • By Authored by CA Rahul Pareva
  • Category Income Tax
  • Views 5035

Introduction    

It is a very common thing for charitable institutions such as schools, colleges, universities and research institutions to receive donations. However, sometimes such claims for donations can be either false or fraudulent. Many such fraudulent claims have tried to take advantage of Section 80G of the Income Tax Act, 1961, which allows the donors a deduction for the amount donated by them to the recognized charitable institutions. Besides, earlier, the procedure for reporting donations was manual, thus providing room for some discrepancies. 
 
To tackle all such issues and bring more transparency in reporting donations, the Income Tax Department of the Government of India has notified vide notification no. 19/2021-Income Tax, that all the persons receiving donations will have to declare the details of the donations received during the financial year in Form 10BD. Contrary to the earlier manual mode of reporting donations, the new rules make it mandatory for the donations to be reported online. Besides, it is to be noted that a certificate shall have to be issued to all such donors via Form 10BE by the recipients of such donations. 
 
This article tries to provide every important detail about Form 10BD application and questions related to it, such as ‘How to file Form 10BD online?’, ‘Does a person need consultants for filing Form 10BD?’ etc. Now let’s look into the details of Form 10BD.

Who will have to file Form 10BD?

Rule 18AB of the Income Tax Act, 1961 is applicable to all such entities (charitable institutions) which have approval u/s 80G and u/s 35(1) of the Act. For these institutions, Form 10BD filing has been made mandatory. It requires them to file a statement of donations (through Form 10BD) beginning from the financial year 2021-2022. All the research institutions, colleges, universities or other institutions which come under clause (i) to section 35 (1A) of the Income Tax Act will also be required to furnish the details of donations in Form 10BD. Apart from this, as mentioned in the beginning, the reporting entities will have to provide a Certificate of Donation to all such donors through Form 10BE.

What is the due date for filing Form 10BD?

According to the new rules, Form 10BD needs to be filed every year starting from the financial year 2021-2022. It has to be filed annually. Rule 18AB (9) says that Form 10BD needs to be filed on or before 31st May, which immediately follows the end of the financial year in which the donations were received. For instance, if donations were received in the financial year 2021-2022, then Form 10BD needs to be filed on or before 31st May 2022.

What is the procedure for filing Form 10BD

Form 10BD has to be filed electronically/digitally through the website (e-portal) of the Income Tax Department. The form needs to have the digital signature of the person authorized to sign the ITR of the reporting entity. 

What details are needed for Form 10BD?

The following details are required for filing the form:
 
* Details of the Reporting person receiving the donations
 
     * PAN
 
     * Reporting Period (Financial Year)

* Details of the Donor –
 
* The Unique Identification number; it can be either PAN or Aadhar number.
 
     * In case neither of the above are available, fill in one of the following – Passport Number/ Tax Payer Identification Number (in case of a foreign resident)/ Voter ID No./ Ration Card Number/ Driving License Number.
 
* Section Code:
 
     * Section 35(1)(iia)
 
     * Section 35(1)(ii)
 
     * Section 35(1)(iii)
 
* Name and Address of the Donor
 
* Donation Type:
 
     * Corpus
 
     * Specific Grants
 
     * Others
 
* Mode of Receipt 
 
     * Cash
 
     * Kind
 
     * Electronic Modes, which includes draft and payee cheque
 
     * Others
 
* Amount of Donation
 
Certificate of Donation
 
After filing Form 10BD, the reporting party needs to provide the donors with a Certificate of Donation through 10BE so that the donors can claim deductions u/s 80G or section 35 of the Income Tax Act. Form 10BE can be downloaded after Form 10BD has been successfully filed. 

What if the reporting entity delays or fails to file Form 10BD?

OR

What is the late fee in the case of Form 10BD?

If the reporting person fails to file Form 10BD within the stipulated time (that is, in case of a delay), due to any reason whatsoever, then such a person shall be liable to pay a penalty of Rs. 200/- per day of non-filing as per the new section 234G of the Income Tax Act, 1961. Apart from this, if the reporting entity fails to furnish the statement of donations through Form 10BD, then according to section 271K, such a person shall attract a penalty of not less than Rs 10,000, which may even extend up to Rs 1,00,000.

Is it possible to revise Form 10BD?

Yes, in case any unintentional errors were made in the form, it is possible for the reporting person to rectify those errors in Form 10BD through a correction form.

Do you need consultants for filing Form 10BD?

Although Form 10BD can be easily filed online, however, if you are facing any difficulty or doubts, it is best to contact an experienced and reputed tax consultant.

Other Details:

1: Reporting Multiple Donations from the same donor

; All the donations from every single donor have to be aggregated, and only a consolidated amount of such donations is required to be reported. However, aggregating such donations is subject to the condition that the ‘Donation Type’ and ‘Mode of Receipt” for all such donations remain the same.

2: Anonymous Donations

; Anonymous donations indicate that the person receiving donations has no record of the identity of the person making such donations. Such donations cannot be reported. Nevertheless, a limit of Rs. 1,00,000 or 5% of total donations received, which is higher, has to be acknowledged while making the reconciliation statement for any difference in the ITR/audit reports and the amount of reported donations.

Conclusion:

Form 10BD has made the role of the donation receiving entities more crucial in bringing out the transparency about the donations. As per the new rules, it is not only enough to declare the details of donations in Form 10BD, but it is equally imperative to furnish a Certificate of Donation to the donors via Form 10BE. These rules are also going to be a turning point in bringing more transparency to the reporting system of donations because now all the details of the donations will be easily available in Form 26AS and AIS.

Conclusion: In order to enhance transparency and combat fraudulent donation claims, the Income Tax Department of the Government of India has introduced Form 10BD for reporting donations. This online filing requirement aims to ensure accurate reporting and issuance of certificates to donors. Failure to comply with the filing deadline may result in penalties, making timely submission crucial. While filing Form 10BD can be done independently, seeking assistance from tax consultants can provide additional support. It's important to note the rules for aggregating donations and handling anonymous contributions. Overall, Form 10BD plays a vital role in promoting accountability and facilitating the deduction process for donors.

Stay compliant and transparent with your donations. Learn how to file Form 10BD online and get expert assistance from our experienced tax consultants. Contact us at info@manishanilgupta.com today!

Disclaimer: The information given in this article is for general guidance to the readers. This information should not be sought as a substitute for legal opinion.

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