The apex direct tax policy making body has sought public comments on a set of draft rules that modifies an over four decade old audit report format for these entities. Religious and charitable trusts with income above the basic exemption limit have to file an audit report. Besides changing the audit report format, the revised rules also mandate more disclosure as part of an annexure.
“As the rule and form were notified long ago, there is a need to rationalize them to align with the requirements of the present times," CBDT said in a statement. Stakeholders can give their views by 5 June.
Tax relief is available to trusts on the income used towards meeting their stated religious or charitable objectives subject to conditions specified in Income Tax Act. A ‘statement of particulars’ that have to be filed along with the audit report requires these institutions to make detailed disclosure about their religious or charitable goals, whether these have been changed, sources of income as well as their use and whether the conditions for tax relief have been complied with or not.
Trusts also have to disclose details about their beneficial owners. Detailed disclosure will enable tax officials to ensure that only those entities that meet the conditions and have used funds for their specified objective are given tax relief.