Form 10 of the Income Tax Act: A Comprehensive Guide

Certain charitable and religious organizations utilize Form 10 to claim income tax exemptions under specific provisions of the Income Tax Act, 1961. Under the act, trusts who are setting apart more than 15% of their income for a specific purpose, should file form 10, disclosing the purpose of the allocation, date within which the purpose is fulfilled. 

In this article, we will provide a detailed explanation of Form 10 as outlined in the Income Tax Act. 

What is Form 10?

• Atleast 85% of the income of the funds should have been applied for purpose for which the charitable or religious institution is established and can accumulate the rest of 15%.
• If 85% of the income is not spent, because the income is allocated or set apart for a specific purpose, the money set apart is eligible for exemption.
• Form 10 is an statement that must be submitted by charitable or religious institutions seeking tax exemption funds so allocated.
• This form is required when a trust or institution intends to accumulate more than 15% of such income, subject to certain conditions outlined below.
• Filing Form 10 notifies the Income Tax Department of the institution’s plans, enabling it to build a reserve or corpus fund for future use—while continuing to enjoy tax-exempt status.

Note: This is applicable under both the regimes.

Who is Eligible to File Form 10?

Any religious or charitable trust or institution in India can file Form 10 for:

• Claiming income tax exemption under Sections 10(23C), 11 and 12AA of the Income Tax Act.
• Accumulate or set apart income for future charitable or religious purposes within the guidelines set by the Income Tax Act.

Contents of Form 10

• Name and PAN of the charitable institution
• Assessment year
• Total amount allocated for specified purposes
• Percentage of the trust’s total income earmarked for allocation
• Purpose for which the amount is allocated
• Duration within which the desired purpose should be accomplished, (in any case the duration shall not exceed 5 years)
• Amount allocated for the said purpose
• Status of amount so allocated in the preceding financial years
• Declaration that the amount so allocated is parked in prescribed modes of investment

Due Date for Filing Form 10

• Form 10 should be filed at least 2 months prior to the due date of filing income tax return of the charitable or religious institution. 
• In most of the cases, these institutions are compulsorily required to conduct tax audit. Due date of return filing for such institutions is 31st October of the next financial year. 
•  However, as per Circular No.6/2023 dated 24/05/2023 clarifies that Form 10 filed before the due date of filing Income tax return will also be considered valid 

Essential Information Required for Form 10

This is the information you would be expected to fill in Form 10:

• Details of the trust or institution, including name, address, PAN, registration number,  and year of formation.
• Specify the section under which the Form is being furnished out of Section 10(23C)(a) or 11(2)(a) or 11(2)(a) read with 10(21).
• Purpose for which amount is being accumulated or set apart.
• Amount of accumulation
• Period of accumulation or set apart
• Amount of income accumulated in the past, year of accumulation, amount applied up to the previous year amount remaining for application and the purpose for which the sum is accumulated or set apart.

What Happens If You Don't File Form 10

• Taxpayers may lose eligibility for certain exemptions or deductions, potentially increasing their taxable income and overall tax liability.
• Non-compliance may also attract penalties and interest charges, and could trigger scrutiny from tax authorities. 
• In serious cases, legal proceedings may be initiated against the individual or organization.

How to file Form 10?

Follow these steps for filing Form 10 online:

Step 1: Login on the e-filing portal 

Step 2: On the dashboard, click ‘e-File’ > ‘Income tax forms’ > ‘File Income Tax Forms’.

Step 3: Scroll down to select Form 10. Alternatively, enter Form 10 in the search box. Click on ‘File now’ button to proceed.

Step 4: Select the Assessment Year for which you are filing the return. For eg: If you are filing taxes for the income earned in FY 2024-25, then select AY 2025-26. 

Step 5: After checking the documents required for filing the form click on 'Let's Get Started'.

Step 6: Fill the details required and click on preview and then Click on ‘Save’.

Step 7: After reviewing all the information, ‘Proceed’ to e-verify'. You can e-verify either through:

• Aadhaar OTP
• Digital Signature Certificate (DSC)
• Electronic Verification Code (EVC)

Once the OTP is entered click on ‘continue’ and the Form 10 will be filed.

PDF format of Form 10