Income Tax Exemption Announced for Specific Trusts and Institutions Under Conditions

The Income Tax Department recently released guidelines on March 8, 2024, specifying conditions under which certain trusts, institutions, universities, educational entities, hospitals, or medical institutions can be exempted from income tax. These exemptions apply to entities falling under sections 10 and those registered under sections 12AA or 12AB of the Income-tax Act, 1961.

To be eligible for exemption under the mentioned sections, trusts or institutions must fulfill certain conditions outlined in various sections of the Act. For example, they must ensure that their accounts are audited and furnish the audit report in the prescribed form before the specified date.

The prescribed forms for audit reports, Form No. 10B and Form No. 10BB, were notified vide Notification No. 7 of 2023 dated February 21, 2023, effective for the assessment year 2023-24 and subsequent years. However, it has been observed that some trusts/institutions have furnished the wrong form, which could result in the denial of exemption.

In light of this, the Central Board of Direct Taxes has allowed trusts/institutions to rectify their audit reports by March 31, 2024, to claim exemption for the assessment year 2023-24. This flexibility is provided under Circular 2/2024 dated March 05, 2024, issued by the CBDT.