Form 10 of the Income Tax Act: A Comprehensive Guide

Form 10 is a crucial form used by some religious and charitable organisations to claim income exemptions under specified sections of the Income Tax Act of 1961. Every organisation seeking these exemptions must know about Form 10. 

What is Form 10?

Form 10 is an application form to be furnished by religious or charitable trusts and institutions to claim tax exemption on income derived from property held in the name of the trust if the trust or institution wants to accumulate more than 15% of the income derived from the property held in the name of the trust, subject to certain conditions, as explained below.

Critical Purposes of Form 10

Accumulation or Setting Apart of Income: Section 11 of the Income Tax Act allows for income accumulation or setting apart of 15% of the income derived from the property held under the trust indefinitely. However, if a religious institution wants to accumulate more than 15% of its income to be applied in the future by charitable or religious institutions for religious or charitable purposes. In that case, they have to file Form 10 specifying the purpose for which it is being accumulated and the period which shall not exceed 5 years. Form 10 enables the institution to inform the Income Tax Department of its intention. This allows these organisations to build a corpus or reserve and use it for their objectives in the future while still maintaining 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.

Conditions for Accumulation of Income

For trusts or institutions planning to accumulate income exceeding 15% annually while seeking exemptions under the Income Tax Act, adherence to these conditions is necessary:

1. Submission of Form 10 to their Assessing Officer is mandatory.
2. Clearly specify the purpose for accumulation.
3. Specify the accumulation period, which shall not exceed 5 years.
4. Ensure that the accumulated funds are deposited in accordance with the modes specified in Section 11(5).
5. File Form 10 on or before the income tax return filing due date.

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.

Due Date for Filing Form 10

As per Section 11 of the Income Tax Act Form 10 should be filed at least 2 months before the due date for filing Income Tax Return. 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.

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 2023-24, then select AY 2024-25. 

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.

Click here to download the pdf format of Form 10.