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. To effectively apply for these exemptions, it's essential for such organizations to have a clear understanding of Form 10. Therefore, gaining in-depth knowledge of its requirements and processes is key to maximizing the benefits available. In this article, we will provide a detailed explanation of Form 10 as outlined in the Income Tax Act. 

What is Form 10?

Form 10 is an application that must be submitted by charitable or religious trusts and institutions seeking tax exemption on income generated from property held in their name. This form is required when a trust or institution intends to accumulate more than 15% of such income, subject to certain conditions outlined below.

Critical Purposes of Form 10

Accumulation or Setting Apart of Income: Under Section 11 of the Income Tax Act, trusts are permitted to accumulate or set aside up to 15% of the income generated from property held under the trust, without any time limit. However, if a religious or charitable institution wishes to accumulate more than 15% of its income for future application towards its objectives, it must file Form 10. This form must specify both the purpose of the accumulation and the intended period, which cannot exceed five years. 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.

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 i.e. before September 30^th.

What Happens If You Don't File Form 10

Under Indian tax law, failing to file Form 10 can lead to significant consequences. 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. Therefore, timely and accurate filing of Form 10 is crucial to avoid these adverse outcomes.

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.

Click here to download the pdf format of Form 10.