CBDT clarifies provisions relating to donations made by a trust / institution to another trust / institution.

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Only 85% of the eligible donations made by a trust or institution registered under Section 12AB to another trust or institution registered under Section 12AB or approved under Section 10(23C) shall be treated as the application.

The amendment introduced in the Finance Act, 2023 has significant implications for eligible Trusts and institutions. Let’s delve into the key points:

  1. Eligible Donations Treatment:
    • When an eligible Trust or institution donates to another eligible Trust or institution, the donation is considered an application for charitable or religious purposes.
    • However, this treatment applies only to 85% of the donated amount. The remaining 15% is not considered an application.
    • For example, if a Trust donates INR 100, it is treated as having applied INR 85 for charitable or religious activities.
  2. Investment Exemption:
    • The 15% portion of the donation that is not considered an application does not need to be invested in specified modes under section 11(5) of the Income-tax Act (ITA).
    • This exemption applies because the entire INR 100 donation has been made to another Trust or institution.
  3. Corpus Donations:
    • The amendment emphasizes that donations should not be towards corpus.
    • Corpus donations are not eligible for the 85% application treatment.
  4. Clarity from CBDT:
    • The Central Board of Direct Taxes (CBDT) has clarified the computation of exemption for such donations.
    • The clarification reiterates the 85% application rule and provides guidance on how to handle eligible donations.

In summary, this amendment encourages donations between eligible Trusts and institutions while ensuring that the funds are primarily used for charitable or religious purposes. It streamlines the treatment of donations and exempts the 15% portion from investment requirements.

ITR filing for AY 2024-25 – New Regime & Old Regime-How to file

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ITR-1, ITR-2 and ITR-4 have been enabled by the Income Tax department for taxpayers to file their Tax Returns for Asst Year 2024-25.

Income Tax Return Form of ITR-1, 2 and 4 are enabled to file through Online mode with prefilled data at the Income Tax e-filing portal, for Assessment Year 2024-25.

In the above, the new income tax regime has become the default option for taxpayers, in the Assessment Year 2024-25 (relating to the financial year ended March 31, 2024). Taxpayers who fail to specify their preference between the old and new regime will have their taxes processed under the New Regime.

However, taxpayers wishing to adhere to old taxation norms have been granted flexibility to change their preference, allowing them to switch between old and new regimes.

The frequency of such switches, however, is conditional on specific types of income.

Income from Salaries

Salaried individuals have the flexibility to switch between the new and old tax regimes multiple times within each financial year.

The new tax regime offers fewer tax deductions and exemptions compared to the old tax regime, which provides various deductions under Chapter VI A from taxable income.

Income from business or profession

Individuals with income from business or profession can only make a one-time choice.

For instance, if an individual with business income switches from the old to the new regime in FY2023, they will not be eligible to switch again.

Once an individual with business income opts out of the new tax regime, they cannot opt back in for the new tax regime in the future.

How to switch while filing ITR

The Central Board of Direct Taxes (CBDT) has introduced two new income tax return forms, ITR-1 (SAHAJ) and ITR-4 (SUGAM), for the Assessment Year 2024-25.

ITR Form 1 now includes the option to select the tax regime. For ITR 4 (individuals with business or professional income), taxpayers will need to file form 10-IEA to opt out of the new tax regime.

Previously, individuals had to fill out Form 10-IE to choose the new tax regime. However, Form 10-IE, which allowed individuals to opt into the new tax regime, has been discontinued.

This change aims to make the new tax regime the default setting, starting from the financial year 2023-24. Therefore, the new tax regime will automatically apply unless individuals take specific action to opt for the old regime.

Old tax regime

The old tax regime offers numerous tax exemptions and deductions for individuals. Commonly claimed exemptions and deductions include allowances such as House Rent Allowance (HRA) and Leave Travel Allowance (LTA), as well as deductions under Sections 80C, 80D, 80CCD(1b), 80CCD(2), and various others.

New tax regime

In the new tax regime, the exemptions and deductions available in the Old Regime are not applicable. If the taxable income (after all deductions) under the old regime is below Rs 5 lakh, no tax is levied. Conversely, under the New Regime, the entire income will be tax-free if the taxable income is under Rs 7 lakh.

Which form to choose:

ITR-1 is filed by individuals, including salaried class and senior citizens.

ITR-2 is filed by businesses and professionals who have opted for presumptive taxation and those individuals whose annual income doesn’t exceed Rs 50 lakh.

ITR-4 is for resident individuals, HUFs and firms (other than LLP) having total income up to Rs 50 lakh and having income from business and profession which is computed under Sections 44AD, 44ADA or 44AE and agricultural income up to Rs 5,000.

Source: https://www.incometax.gov.in/iec/foportal//latest-news#

Income Tax Advisory for Trusts / Institutions

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                                                                  ATTENTION TRUSTS/ INSTITUTIONS                         08-Mar-2024

Income of any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or subclause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 (hereinafter referred to as trust or institution under the first regime) of the Income-tax Act, 1961 (hereinafter referred to as the Act) or any trust or institution registered under section 12AA or section 12AB of the Act (hereinafter referred to as trust or institution under the second regime) is exempt subject to fulfilment of certain conditions specified under various sections of the Act.

One of the conditions required to be fulfilled by the trust or institution in order to be eligible to claim exemption under the first regime, is laid down in clause (b) of the tenth proviso to clause (23C) of section 10 of the Act. This states that in case the total income of the trust or institution, as computed under the Act without giving effect to the provisions of exemption under the first regime, exceeds the maximum amount which is not chargeable to income-tax in any previous year, the trust or institution is required to get its accounts audited and furnish the audit report in the prescribed Form before the specified date.

A similar condition is in place for trust or institution under the second regime in subclause (ii) of clause (b) of sub-section (1 ) of section 12A of the Act.

Rule 16CC and 17B of the Income-tax Rules, 1962 (hereinafter referred to as the Rules) prescribe the form of audit report for trust or institution under the first and second regime respectively. They provide that the report of audit of the accounts of a trust or institution, shall be furnished in –

(a) Form No. l0B where,

(i) the total income of trust or institution, exceeds rupees five crores during the previous year; or

(ii) such trust or institution has received any foreign contribution during the previous year; or

(iii)such trust or institution has applied any part of its income outside India during the previous year;

(b) Form No. 10BB in other cases.

The new forms, Form No. l0B/ Form No. l0BB, were notified vide Notification No. 7 of 2023 dated 21st February, 2023. The above prescription was put in place w.e.f. 01.04.2023, vide the Income-tax (Third Amendment) Rules, 2023, and is therefore, effective for assessment year 2023-24 and subsequent assessment years. The due date for furnishing such audit reports for the A.Y. 2023-24 was 31st October, 2023.

It has come to the attention of the Board that in a number of cases trusts/ institutions have furnished audit report in Form No. l0B, where Form No. 10BB was required to be furnished for the A.Y. 2023-24. Similarly, in a number of cases trusts/ institutions have furnished audit report in Form No. 10BB, where Form No. l0B was required to be furnished for the A.Y. 2023-24. As noted above, non-furnishing of audit report in the prescribed form would result in denial of exemption in such cases as it is one of the conditions which is required to be satisfied for claim of exemption.

In view of the above, the Central Board of Direct Taxes, in exercise of its powers under section 119 of the Act has allowed those trusts/ institutions which have furnished audit report on or before 31st October, 2023 in Form No. l0B where Form No. 10BB was applicable and vice-versa, to furnish the audit report under clause (b) of the tenth proviso to clause (23C) of section 10 and sub-clause (ii) of clause (b) of sub-section (1) of section l2A of the Income-tax Act, 1961, in the applicable Form No. l0B/ 10BB for the assessment year 2023-24, on or before 31st March, 2024. Please refer to CBDT Circular 2/2024 dated: 05th March 2024. Please furnish audit report in correct prescribed form for AY 2023-24 on or before 31st March 2024 to claim exemption.

Source: Central Board of Direct Taxes Circular

Union Budget 2024 Highlights: Announcements by Finance Minister Nirmala Sitharaman

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Summary of Direct and Indirect Tax Proposals: Budget 2024-25

 Summary of the direct and indirect tax proposals made in the Budget 2024-25 (Finance Bill 2024) presented by Smt Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs:

Highlights of the Direct Tax Proposals of Finance Bill, 2024

No changes in Tax Rates

No changes have been proposed to the existing rates of direct and indirect taxes. The existing rates of income tax, gst, import duties, etc. have been retained.

To provide continuity, some tax benefits and exemptions have been extended by 1 year until 31st March 2025. These include:

  1. Tax benefits for startups;
  2. Tax exemptions on certain income for International Financial Services Centers (IFSCs); and
  3. Tax exemptions on investments made by sovereign wealth funds and pension funds.

The Interim Budget 2024 maintains the status quo on tax rates and extends certain tax breaks by a year to provide stability and continuity in taxation. No new changes or reforms have been introduced to the tax structure or rates.

Withdrawal of Outstanding direct tax demands

The FM has announced to withdraw the outstanding demands of income tax. Here is a summary of the key points regarding the withdrawal of outstanding direct tax demands announced in the Interim Budget 2024:

i) In line with the government’s vision to improve ease of living and doing business, outstanding petty direct tax demands up to Rs 25,000 dating back to 1962 will be withdrawn for the period up to FY 2009.

ii) Similarly, outstanding demands up to Rs 10,000 will be withdrawn for the FY 2010-11 to 2014-15.

iii) These are non-verified, non-reconciled or disputed demands that continue to remain on the books, causing anxiety for taxpayers.

  1. Withdrawing these demands will help provide relief to honest taxpayers and enable refunds for subsequent years.
  2. This is expected to benefit about 1 crore taxpayers who have such outstanding demands.
  3. The move aims to improve tax payer services and reduce harassment of taxpayers over small disputed sums dating back decades.

In short, the Interim Budget 2024 has announced the withdrawal of old, petty direct tax demands up to Rs 25,000 till FY 2009-10 and Rs 10,000 between FY 2010-11 to 2014-15 to provide relief to taxpayers.

Highlights of the Indirect Tax Proposals of Finance Bill 2024

The FM has proposed in Budget 2024 to retain the same tax rates in respect of GST, import duty, etc. indirect taxes as are applicable at present, i.e. existing GST and import duty rates shall continue in FY 2024-25 as well.

BUDGET HIGHLIGHTS 2024-25, Ministry of Finance

Chairman, CBIC has launched CBIC’s WhatsApp Channel – ‘CBIC India’

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In the weekly newsletter dated January 8, 2024, Chairman Sanjay Kumar Agrawal of the Central Board of Indirect Taxes and Customs (CBIC) shared noteworthy updates.

From the launch of CBIC’s WhatsApp channel to commendable achievements, the newsletter provides insights into the latest developments within the organization.

Here are the detailed Analysis:

==========================

  1. WhatsApp Channel Launch:

Chairman Agrawal introduced the recently launched CBIC India WhatsApp channel. With a presence on various social media platforms, including Twitter, Facebook, Instagram, YouTube, and Koo, CBIC aims to enhance taxpayer information and facilitation. The WhatsApp channel, a pioneering move by a government department, already boasts around 7,500 followers.

  1. IRS Officers Passing Out Ceremony:

The newsletter highlights the Passing Out Ceremony of the 73rd Batch of IRS (C&IT) Officers. Chairman Agrawal emphasizes the significance of knowledge, citing the academy’s motto. The trained officers, ready to serve, demonstrate espirit de corps and are prepared to administer customs and indirect taxes.

  1. Medals and Recognitions:

Exceptional officers are recognized during the ceremony, with medals awarded for outstanding performance during their probationary period. Notable achievements include the FM and Chairman Gold Medal, Kaushalya Narayanan Memorial Gold Medal, Director General Gold Medal, and N. K. Upadhyay Memorial Gold Medal.

  1. Vigilance Achievements:

CBIC achieved a record number of disposals of vigilance cases in 2023, with 524 disciplinary proceedings disposed of. The Chairman commends the collective effort and expresses confidence in sustaining this momentum for the upcoming year, aiming for new heights in vigilance administration.

5. Relief Measures for Rain-Affected Areas:

Due to heavy rains in Tamil Nadu, CBIC approved the extension of due dates for filing GSTR-3B and Annual Return. This decision aims to provide relief to taxpayers in rain-affected areas.

  1. Customs Success Story:

The newsletter highlights a successful case booked by Trichy Customs (Preventive) Commissionerate, showcasing the vigilance and teamwork of officers. A specific intelligence-led operation led to the recovery of 7.70 kgs of gold worth Rs. 4.85 Crore.

Conclusion: Chairman Sanjay Kumar Agrawal’s weekly newsletter encapsulates the dynamism of CBIC, showcasing achievements, recognitions, and significant initiatives.

From technological advancements like the WhatsApp channel launch to the vigilance administration accomplishments, the newsletter underscores CBIC’s commitment to efficiency, transparency, and serving the public interest.

Stay tuned for more updates and insights in the weeks to come, as CBIC continues its journey towards excellence in customs and indirect taxes administration.

WhatsApp Channel

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New ITR forms: What’s new in ITR-1 and ITR-4 for AY 2024-25?

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Income Tax
CBDT has released the new ITR forms – ITR-1 and ITR-4 – for FY 2023-24 early this year. These forms are applicable for filing income tax return before July 31, 2024, unless extended.

New ITR forms AY 2024-25: Taxpayers will now be required to provide information regarding cash receipts and all their bank accounts within the country according to the latest Income Tax Return (ITR) Forms for the Assessment Year 2024-25, as notified by the Central Board of Direct Taxes.

CBDT has released the new ITR forms – ITR-1 and ITR-4 for FY 2023-24 early this year.

These forms are applicable for filing income tax return for AY 2024-24 with the last date of July 31, 2024, unless extended.

One noteworthy feature of the new ITR forms is that The Finance Act, 2023 has modified Section 115 BAC, establishing it as primary tax regime for individuals, HUFs, AOPs, BOIs, and AJPs. Under this amendment, if an assessee prefers not to adhere to the new tax regime, they must expressly opt out and select the Old Regime for their taxation.

The ITR 1, also known as Sahaj, can be filed by individuals with an income up to Rs.50 lakhs. This includes income from salary, one house property, other sources such as interest, dividends, etc and agricultural income up to Rs.5,000.


Taxpayers will need to provide details of all their bank accounts operational in the previous year along with the type of account.

The updated income tax return forms also include a special section for deductions for Agniveers, the youth serving in the armed forces under the Agnipath scheme, as per Section 80CCH.


Individuals, Hindu undivided families (HUFs), and firms, excluding limited liability partnerships (LLPs), with a total income up to Rs.50 lakhs and income from business and profession, can file ITR 4, also known as Sugam.

In the previous year, the forms were notified in February. Previously, there was a separate column for cryptocurrency.  However, in the new ITR, a new disclosure has been added to specify “receipts in cash’ in the New ITR 4 Form.

Here are some cases in which the assessee cannot file ITR 1 –

  • Any individual having an income of more than INR 50 lakhs.
  • An individual holding a directorial position in a company or having unlisted equity shares during the financial year.
  • Non-residents and Resident but not ordinarily resident (RNOR).
  • Individuals with income from more than one house property
  • Income from lottery, horse races, and legal gambling.
  • Short-term and long-term capital gains
  • Agricultural income is more than 5000.
  • Income from business and profession
  • Any resident having assets outside India
  • Individuals claiming Foreign Tax Credit under sections 90, 90A and 91.
  • Deferred Income Tax on ESOP.

Here are some cases in which the assessee cannot file ITR 4 –

  • If the turnover of the business exceeds Rs. 2 crores (3 crores for FY- 2023-24), the taxpayer will have to file ITR-3
  • If your total income is more than INR 50 lakhs
  • Have income from more than one house property and own a foreign asset
  • Signing authority in any foreign account
  • Having a foreign income source
  • Have directorship in a company
  • Non-resident or RNOR status
  • Having unlisted equity shares
  • If the ESOP payment is deferred to ESOP
  • In case you have any brought forward losses.

Extension of time for GSTR-3B Filing for November 2023 in specific districts of Tamil Nadu

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In response to the devastation caused by the MICHAUNG cyclone in early December 2023, the deadline for monthly GST returns has been extended, in respect of the taxpayers whose principal place of business is located in the four cyclone-affected districts of Chennai, Tiruvallur, Chengalpattu and Kancheepuram, as per release from Commercial Taxes Department.


The CBIC vide Notification No. 55/2023 – Central Tax dated December 20, 2023, extends the deadline for filing FORM GSTR-3B for November 2023 until December 27, 2023.

This extension applies to registered individuals with their principal place of business in specific districts of Tamil Nadu (Chennai, Tiruvallur, Chengalpattu, Kancheepuram), as recommended by the Council under section 39(1) and rule 61(1)(i) of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”).