Income Tax--Exempt Entities

Maintenance of Books of Accounts by Trusts and Exempt Institutions--Law and Procedure Regarding

CA. Manoj Gupta

The Finance Act, 2022 has provided that all trusts registered under Income Tax Act either under section 12A or section 10(23C) need to maintain books of accounts in specified manner. Recently, the CBDT has inserted rule 17AA providing for books and records to be maintained by such entities. The learned author explains the law regarding maintenance of books, consequences of violation and also lists out procedural requirements.

1. Maintenance of books of accounts by trusts and exempt institutions

Clause (b) of section 12A(1) provides that where the total income of the trust or institution as computed under the Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income tax in any previous year, the accounts of the trust or institution for that year shall be audited by a chartered accountant. The maximum amount not chargeable to tax is Rs. 2,50,000 for assessment years 2022-23 and 2023-24.