What is the Importance of Form 10 BD Statement of Donations?

Introduction

Form 10BD is a statement of donations received by an entity registered under Section 12A, 12AA, 10(23C), or 35AC of the Income Tax Act. The purpose of this form is to provide details of the donations received during the financial year and to ensure that the donations received are reported to the Income Tax Department. The assignee, i.e., the trust, NGO, or institution receiving such donations is required to furnish a donation return in Form 10BD to the Income Tax Department, providing the details of such donations. In this article, we will discuss the importance of Form 10BD, its applicability, and its due date.

What is Form 10BD?

Form 10BD is an essential document required by the Income Tax Department for individuals and organizations that have made charitable donations. It serves as a statement detailing the donations made during the financial year. By filing this form, taxpayers can claim deductions under Section 80G of the Income Tax Act, 1961, thereby reducing their taxable income.

What is the applicability of Form 10BD?

As per the Income Tax Act, all donations received by an organization, whether domestic or foreign, must be reported on Form 10BD. The form is applicable to entities registered under Section 12A, 12AA, 10(23C), or 35AC of the Income Tax Act. It is mandatory for all such entities to file Form 10BD if they have received any donations during the financial year.

What is the importance of Form 10BD?

The importance of Form 10BD is as follows:

1. Compliance with Tax Regulations: Filing Form 10BD is important for taxpayers to comply with income tax regulations. By providing detailed information about the donations made, individuals and companies demonstrate transparency and fulfill their obligations towards the Income Tax Department.

2. Availing Tax Deductions: Form 10BD enables taxpayers to claim tax deductions under Section 80G. The amount donated to eligible entities can be deducted from the total taxable income, leading to a reduction in the tax liability. This provision encourages individuals and companies to contribute towards charitable causes.

3. Supporting Charitable Organizations: The importance of Form 10BD is beyond personal benefits. By reporting donations through this form, taxpayers contribute to the growth and strength of charitable organizations. These entities rely on donations to carry out their valuable work, and by claiming deductions, taxpayers indirectly support their initiatives.

What is the due date of Form 10BD?

Form 10BD is to be filed on or before the 31st of May immediately following the financial year in which the donation is received. For example, if an organization receives a donation in the financial year 2022-23, it must file Form 10BD on or before May 31, 2023.

What are the consequences of not filing Form 10BD?

Failure to submit Form 10BD will result in financial penalties. A daily fee of Rs.200/- will be imposed for each day of delay, as specified in the newly added section 234G. Additionally, not filing this form will lead to a penalty under section 271K, with a minimum penalty of Rs.10,000/- and a maximum penalty of Rs.1,00,000/-.

Important points about Form 10BD

• Form 10BD was introduced to bring more transparency to the system.
• Form 10BD needs to be filed by the research association, university, college, or other institution company or fund as mentioned in Rule 18AB.
• In Form, the institution shall have to provide specific details of the donations made by the donors.
• Once Form 10BD is filed, the institution shall have to download Form 10BE i.e. Certificate of Donation, and provide the same to the donors.

Conclusion

Form 10BD Income Tax or the Statement of Donations, holds immense importance for taxpayers. By adhering to the applicability criteria and filing the form on time, individuals and companies can avail themselves of tax deductions and support charitable organizations. Understanding the significance of Form 10BD allows taxpayers to fulfill their obligations and contribute to the betterment of society.

Suggested Read: Key Differences Between Form 10BD and Form 80G