Closer scrutiny of trusts and institutions on cards, draft rules out

New Delhi, May 21 (IANS) The Income Tax Department has proposed a new audit report form for charitable trusts and institutions requiring additional information and disclosures about their activities.

Accordingly, it has issued draft amendment to Rule 17B which prescribes form for audit report of trusts and institutions. The deadline for giving suggestions and comments on the proposed changes is June 5.

Tax experts said that proposed changes would help the tax department get more precise information about the assessee and avoid the need for unnecessary clarification later on.

The draft amendment in the rule has proposed a new 8-page Form 10B as against the existing 3-page form.

"As the rule and form were notified long ago, there is a need to rationalise them to align with the requirements of the present times," said the draft notification for stakeholder consultation.

The annexure to the proposed Form 10B seeks many details and disclosures including the statute under which trust/institution was constituted, registration under Income Tax Act, object of trust/institution and details of income and application of income among others.

Commenting on the proposed changes, Prateek Agarwal, Partner (Audit & Assurance), Nangia & Co LLP said that with the proposed changes in the tax audit report for charitable trusts, the responsibility of the auditors will increase significantly as there are various additional disclosure requirements in the Annexure to Form 10B.

"Above all, as per the revised Form 10B, now the auditor needs to certify that in his opinion and to the best of the information and according to explanations given, the particulars given in the said annexure are true and correct," he said.