NGO and trust audit for FY 2025-26 — Form 10B vs 10BB applicability decoded

NGO & Trust Audit for FY 2025-26: Form 10B vs Form 10BB Applicability Decoded

A Complete Guide for Charitable & Religious Trusts — AY 2026-27

Introduction

Non-Governmental Organisations (NGOs), charitable trusts, religious trusts and other institutions enjoying income-tax exemption have specific compliance obligations under the Income-tax Act, 1961.

One of the most important annual compliances for eligible charitable or religious institutions is obtaining the prescribed audit report in Form 10B or Form 10BB, wherever applicable.

For FY 2025-26, corresponding to AY 2026-27, trustees and finance teams need to determine the correct form carefully because choosing Form 10B or Form 10BB is no longer based simply on whether the organisation is registered under Section 12AB or Section 10(23C).

From AY 2023-24 onwards, the Income-tax Rules introduced a condition-based mechanism. Form 10B is required in specified higher-risk/higher-complexity situations, while Form 10BB applies in other cases.

This article explains the applicability, threshold, foreign contribution condition, application of income outside India, audit process, documents required, common mistakes and practical compliance checklist for FY 2025-26 / AY 2026-27.

1. What Are Form 10B and Form 10BB?

Form 10B and Form 10BB are prescribed audit reports for charitable or religious trusts/institutions claiming exemption under the applicable provisions of the Income-tax Act.

The forms are furnished electronically through the Income-tax e-Filing portal by a Chartered Accountant.

The purpose is to provide detailed information regarding matters such as:

Income of the trust;

Application of income;

Donations;

Investments;

Loans and advances;

Related-party transactions;

Foreign contributions;

Specified transactions;

Compliance with applicable conditions.

The exact reporting requirements depend on the prescribed form.

2. Why Form 10B vs 10BB Is Important in FY 2025-26

The major change came from AY 2023-24 onwards.

Earlier, the distinction between Form 10B and Form 10BB was largely linked to the exemption regime under which the institution operated.

From AY 2023-24 onwards, the rules were amended so that the nature of the trust’s activities and specified conditions determine which form is applicable.

The Income-tax Department itself clarified that the applicability from AY 2023-24 onwards has to be determined under the amended Rule 16CC and Rule 17B, irrespective of which form was filed in earlier years.

Therefore:

Don’t simply copy last year’s Form 10B/10BB decision. Re-check applicability every year.

3. FY 2025-26 Means AY 2026-27

This is an important point for accounting teams.

Particular Period

Previous Year FY 2025-26

Financial Year 1 April 2025 – 31 March 2026

Assessment Year AY 2026-27

Relevant audit report Form 10B / Form 10BB

Applicable rules Rules applicable for AY 2026-27

Therefore, if the trust’s books are being closed for the year ended 31 March 2026, the Form 10B/10BB determination relates to AY 2026-27.

4. The Basic Form 10B Rule

From AY 2023-24 onwards, Form 10B is applicable if any of the prescribed conditions is satisfied.

Broadly, Form 10B applies where:

Condition 1

The relevant total income, calculated without giving effect to the specified exemption provisions, exceeds ₹5 crore during the previous year.

OR

Condition 2

The trust/institution has received any foreign contribution during the previous year.

OR

Condition 3

The trust/institution has applied any part of its income outside India during the previous year.

If none of these conditions is satisfied, Form 10BB generally applies.

5. The ₹5 Crore Threshold — Understand It Correctly

One of the biggest mistakes is assuming:

“Our gross receipts are below/above ₹5 crore, so Form 10B/10BB is automatically decided.”

That is not the correct way to read the rule.

The rule refers to total income of the auditee without giving effect to specified exemption provisions, rather than simply saying “gross receipts”.

Therefore, the calculation should be performed carefully based on the prescribed statutory framework.

The Income-tax Department specifically describes the threshold in terms of total income computed without giving effect to the relevant provisions of Section 10(23C) and Sections 11 and 12.

6. Example — Trust With ₹8 Crore Receipts

Suppose:

ABC Charitable Trust

Gross receipts: ₹8 crore

But after considering relevant items, the amount required for the statutory threshold calculation is ₹4.80 crore.

In such a situation, simply looking at the ₹8 crore gross receipts and concluding that Form 10B is mandatory may be incorrect.

The prescribed computation needs to be performed.

Key takeaway:

₹5 crore is not simply a “gross receipts test”.

7. Foreign Contribution — A Critical Trigger

Even where the organisation does not cross the ₹5 crore threshold, receiving any foreign contribution during the previous year is one of the specified triggers for Form 10B.

For example:

Domestic donations:

₹3.50 crore

Foreign contribution:

₹5 lakh

Even though the organisation may not cross the ₹5 crore threshold, the foreign contribution condition can make Form 10B applicable.

The Income-tax Department expressly lists receipt of foreign contribution as an independent condition.

8. What Is Foreign Contribution?

For practical compliance, an NGO should carefully identify whether any receipt qualifies as foreign contribution under the applicable legal framework.

This may require consideration of the Foreign Contribution (Regulation) Act, 2010 (FCRA) where applicable.

Examples may include eligible contributions received from:

Foreign individuals;

Foreign organisations;

Foreign foundations;

Overseas donors.

However, classification should be made based on the applicable law and facts rather than merely looking at the donor’s address or currency.

9. FCRA and Income-tax Compliance Are Different

This distinction is extremely important.

An NGO may have:

FCRA compliance

and separately:

Income-tax compliance.

Holding an FCRA registration does not by itself mean that every receipt is automatically foreign contribution.

Similarly, not having FCRA registration does not mean an organisation can ignore the income-tax consequences of foreign receipts.

The accounting team should separately map:

Donor → Country → Nature of receipt → FCRA classification → Income-tax treatment → Form 10B reporting

10. Application of Income Outside India

Another independent trigger is where the trust has applied any part of its income outside India during the previous year.

For example, suppose an Indian charitable trust has:

Total relevant income: ₹3 crore

Amount spent on an eligible charitable project outside India: ₹10 lakh

Even though the trust may not cross ₹5 crore, the foreign application condition can trigger Form 10B.

Therefore, international charitable activities should be specifically identified during audit planning.

11. What Is Form 10BB Then?

Form 10BB is generally applicable in other cases, i.e. where none of the specified Form 10B triggers is satisfied.

The Income-tax Department expressly states:

Form 10B applies when the prescribed conditions are satisfied, and Form 10BB applies in other cases.

So the easiest way to understand the system is:

First test Form 10B conditions.

If YES → Form 10B

If NO → Form 10BB

12. Form 10B vs Form 10BB — Quick Comparison

Particular Form 10B Form 10BB

Applicable from AY 2023-24 Yes Yes

Relevant for AY 2026-27 Yes Yes

Income threshold condition Exceeds ₹5 crore under prescribed computation Generally not triggered

Foreign contribution Any receipt can trigger No such Form 10B trigger

Application outside India Any such application can trigger No such Form 10B trigger

Reporting More detailed Applicable in other cases

Filed by Chartered Accountant Chartered Accountant

Electronic filing Yes Yes

The distinction is based on the amended Rules rather than the old section-wise approach.

13. Old Rule vs New Rule

This is one of the most important parts for professionals.

Earlier — Up to AY 2022-23

The form selection was substantially linked to the exemption regime.

For example:

Section 12A/12AA → Form 10B

and certain Section 10(23C) institutions → Form 10BB.

From AY 2023-24

The system changed.

Form selection became condition-based.

The Income-tax Department’s own webinar explains that from AY 2023-24, Form 10B and Form 10BB applicability is based on conditions and applies under both relevant regimes.

14. A Major Mistake: “Last Year We Filed 10BB”

Suppose a trust filed:

AY 2025-26 → Form 10BB

Can it automatically file:

AY 2026-27 → Form 10BB?

No.

Applicability must be determined again for FY 2025-26.

Similarly, if a trust filed Form 10B last year, it does not automatically mean Form 10B will apply this year.

The Income-tax Department specifically confirms that the applicable form for subsequent years must be determined based on the amended rules.

15. Form 10B / 10BB Is Not the Same as ITR

Another common misconception is:

“We filed the NGO’s ITR, so audit compliance is complete.”

Not necessarily.

Where the prescribed audit report is applicable, the Form 10B/10BB process is a separate compliance requirement.

The audit report is prepared and furnished electronically by the CA, followed by acceptance/verification by the taxpayer.

16. Who Can File Form 10B or 10BB?

The audit report is furnished electronically by a Chartered Accountant.

The taxpayer first assigns the applicable form to the CA through the e-Filing portal.

The CA then:

Accepts the assignment;

Prepares the report;

Uploads the prescribed data/JSON and attachments as applicable;

Submits the form;

Taxpayer accepts the uploaded form;

Taxpayer verifies it using the prescribed authentication mechanism.

The Income-tax Department states that filing is considered completed only after the taxpayer accepts the form submitted by the CA and verifies it with the active DSC/EVC as applicable.

17. Form 10B / 10BB Filing Workflow

The practical workflow is:

Step 1 — Close Books

Complete:

Income;

Expenses;

Assets;

Liabilities;

Donations;

Investments;

Bank reconciliation.

Step 2 — Determine Applicability

Check:

₹5 crore condition;

Foreign contribution;

Foreign application.

Step 3 — Select Form

Form 10B or Form 10BB

Step 4 — Appoint/Assign CA

Assign the form through the Income-tax e-Filing portal.

Step 5 — CA Prepares Audit Report

CA reviews books and supporting documents.

Step 6 — Upload

CA uploads the form and required attachments.

Step 7 — Taxpayer Acceptance

Trust/NGO accepts the form.

Step 8 — Verification

Complete the applicable DSC/EVC verification.

Step 9 — ITR

File the applicable return after ensuring audit-report compliance.

18. Documents Required for NGO Audit

A professional NGO audit file should generally include:

Corporate/Legal Documents

Trust deed / incorporation documents;

PAN;

Registration certificate;

12AB registration;

80G approval;

Section 10(23C) approval, where applicable;

FCRA registration, where applicable.

Financial Documents

Trial balance;

Ledger;

Cash book;

Bank statements;

Bank reconciliation;

Fixed asset register;

Investment details;

Loans and advances.

Donation Documents

Donation register;

Donor details;

Donation receipts;

Corpus donation details;

Foreign contribution details.

Expense Documents

Bills;

Vouchers;

Salary records;

Project expenses;

Administrative expenses;

Capital expenditure.

Compliance Documents

Previous year’s ITR;

Previous Form 10B/10BB;

Form 10BD/10BE, where applicable;

FCRA returns, where applicable;

GST returns, where applicable.

19. Corpus Donations

Corpus donations require special attention.

The accounting team should identify:

Whether donation is specifically directed towards corpus;

Donor communication;

Applicable conditions;

Whether it is properly recorded;

Whether investment requirements are met;

Whether application/restrictions are correctly considered.

The audit team should not rely merely on ledger narration saying:

“Corpus Donation.”

There should be appropriate documentary support.

20. Anonymous Donations

NGOs should also review anonymous donation provisions where applicable.

The audit process should identify:

Donation source;

Donor records;

Receipt numbers;

PAN details where required;

Address/details;

Whether donation qualifies as anonymous under applicable provisions.

This is particularly important because tax treatment may vary depending on the nature of the institution and donation.

21. Application of Income

One of the most important areas in charitable-trust taxation is application of income.

The audit should separately analyse:

Revenue expenditure

and

Capital expenditure.

The accounting treatment alone does not necessarily determine the tax treatment.

The tax rules governing application of income need to be examined separately.

22. Accumulation of Income

A trust may have situations where income is not immediately applied.

The audit team should review:

Amount accumulated;

Purpose;

Statutory conditions;

Relevant forms;

Time limits;

Investments;

Subsequent application.

If accumulation provisions are being used, documentation should be reviewed carefully.

23. Loans and Advances

Loans and advances to:

Trustees;

Settlor;

Founders;

Related persons;

Interested persons;

require careful scrutiny.

A charitable organisation should not treat trust funds like ordinary business funds of its promoters.

Specified-person transactions may have serious tax consequences.

24. Related Party / Interested Person Transactions

The audit should identify transactions involving persons covered by the relevant provisions.

Examples may include:

Trustees;

Settlor;

Their relatives;

Significant contributors;

Related entities.

Examples:

Rent paid to trustee’s family member.

Salary paid to related person.

Loan given to interested person.

Purchase from a related entity.

Such transactions should be properly documented and examined under the applicable provisions.

25. Investment of Trust Funds

Charitable institutions must carefully examine how surplus funds are invested.

The audit should identify:

Bank deposits;

Mutual funds;

Shares;

Bonds;

Securities;

Loans;

Other investments.

The tax exemption framework contains restrictions and conditions concerning investment of charitable funds.

Therefore, the audit should not simply reconcile the investment ledger with bank statements.

The nature and eligibility of investment should also be reviewed.

26. Foreign Contribution Reconciliation

Where the NGO receives foreign contribution, prepare a dedicated reconciliation.

For example:

Particular Amount

Opening FC balance ₹10,00,000

Foreign contribution received ₹25,00,000

Interest/other eligible income ₹1,00,000

FC expenditure ₹18,00,000

Closing balance ₹18,00,000

The figures should reconcile with the relevant bank records and applicable FCRA records.

27. Foreign Application Reconciliation

Where money is spent outside India, prepare:

Date;

Amount;

Currency;

Beneficiary;

Purpose;

Country;

Supporting documents;

Board/trustee approval;

Applicable permission/compliance.

This is particularly important because application of any part of income outside India is independently relevant to Form 10B applicability.

28. ₹5 Crore Test — Practical Audit Working

For every trust, the audit working paper should contain a clear conclusion.

Example:

Trust A

Relevant total income: ₹4.20 crore

Foreign contribution: No

Foreign application: No

Conclusion:

Form 10BB

Trust B

Relevant total income: ₹6.25 crore

Foreign contribution: No

Foreign application: No

Conclusion:

Form 10B

Trust C

Relevant total income: ₹2.80 crore

Foreign contribution: ₹2 lakh

Foreign application: No

Conclusion:

Form 10B

Trust D

Relevant total income: ₹3.10 crore

Foreign contribution: No

Foreign application: ₹5 lakh

Conclusion:

Form 10B

These examples illustrate the condition-based approach.

29. Decision Tree for Form 10B vs 10BB

A simple professional decision tree is:

START

↓

Is prescribed audit report applicable?

↓

Calculate relevant total income

↓

Does it exceed ₹5 crore?

→ YES → FORM 10B

→ NO ↓

Any foreign contribution received?

→ YES → FORM 10B

→ NO ↓

Any income applied outside India?

→ YES → FORM 10B

→ NO ↓

FORM 10BB

This should be used as a practical screening tool, followed by detailed statutory review.

30. What If Income Is Exactly ₹5 Crore?

The rule refers to income exceeding ₹5 crore.

Therefore, the distinction between:

₹5,00,00,000

and

₹5,00,00,001

can matter.

However, the relevant statutory computation should first be correctly performed rather than comparing the gross receipts figure.

31. Can a Trust With Low Income Still Need Form 10B?

Yes.

This is an important point.

A trust could have income below ₹5 crore and still fall under Form 10B if:

It received foreign contribution; or

It applied income outside India.

The Income-tax Department explicitly treats these as independent triggers.

32. Can a Large Trust File Form 10BB?

Potentially, yes, depending on the prescribed statutory calculation.

The mistake is to say:

“Gross receipts above ₹5 crore = automatically 10B.”

The test is based on the specified total-income calculation, not simply turnover/revenue.

Therefore, the working should be prepared before deciding the form.

33. What If the NGO Has No Taxable Income?

Another common question is:

“Our NGO’s income is exempt, so do we need the audit report?”

The answer cannot be determined simply by saying:

“Tax payable is zero.”

The applicability of the audit report needs to be checked under the relevant provisions governing charitable/religious institutions.

The Income-tax Department itself cautions taxpayers to refer to the relevant provisions of Section 12A/Section 10(23C) read with Rules 16CC/17B when determining Form 10B applicability.

34. Form 10B Is More Detailed

From a compliance perspective, Form 10B generally requires extensive information.

Therefore, organisations falling under Form 10B should start audit preparation early.

The CA may require detailed information about:

Donations;

Donors;

Applications;

Investments;

Specified persons;

Foreign transactions;

Assets;

Liabilities;

Other prescribed particulars.

This is why NGO accounting should be maintained throughout the year rather than reconstructed at year-end.

35. Form 10BB Also Requires Proper Records

Choosing Form 10BB does not mean:

“Audit is only a basic formality.”

The organisation still needs proper books and supporting documents.

A smaller trust can still face issues relating to:

Incorrect donation accounting;

Unsupported expenses;

Wrong corpus classification;

Related-party payments;

Investment violations;

Incorrect application calculations.

36. Common Mistakes in NGO Audit

Mistake 1 — Selecting Form Based on Last Year

Wrong approach.

Applicability must be determined afresh for the relevant year.

Mistake 2 — Looking Only at Gross Receipts

The ₹5 crore test is not simply a gross-receipts test.

Mistake 3 — Ignoring Foreign Contribution

Even a small foreign contribution can be relevant to Form 10B applicability.

Mistake 4 — Ignoring Foreign Expenses

Any application of income outside India should be specifically examined.

Mistake 5 — Treating FCRA and Income-tax as One Compliance

They are separate regulatory frameworks.

Mistake 6 — Poor Donation Documentation

Every major donation should have proper supporting records.

Mistake 7 — No Separate Corpus Tracking

Corpus donations should be separately identified and supported.

Mistake 8 — Related-Party Transactions Not Disclosed

Trustee-related transactions should be reviewed carefully.

Mistake 9 — Wrong Form Uploaded

Using an old or incorrect form can create compliance problems.

The Department has specifically clarified that the re-notified forms applicable from AY 2023-24 onwards must be used.

37. Re-Notified Forms — Important Point

The Income-tax Department has clarified that the new Form 10B and Form 10BB were notified through Notification No. 7/2023 dated 21 February 2023.

They apply from AY 2023-24 onwards.

Therefore, for:

FY 2025-26 / AY 2026-27

the relevant AY 2023-24 onwards versions should be used.

Do not use the old versions applicable to AY 2022-23.

38. E-Filing of Form 10B / 10BB

The process is digital.

Broadly:

Taxpayer

Assigns form to CA.

↓

Chartered Accountant

Accepts assignment.

↓

Prepares form.

↓

Uploads required information/JSON/attachments.

↓

Taxpayer

Accepts form.

↓

Verification

DSC/EVC as applicable.

The Income-tax Department confirms that taxpayer acceptance and verification are part of completion of the filing process.

39. CA’s Role

The CA should not simply upload the form based on the trial balance.

The audit should include review of:

Books;

Supporting documents;

Income;

Application;

Donations;

Investments;

Specified transactions;

Foreign contributions;

Foreign application;

Statutory registrations;

Applicable conditions.

The Form 10B/10BB should be the outcome of the audit—not merely a portal filing.

40. NGO’s Internal Year-End Checklist

Before giving books to the CA, management should prepare:

Accounts

☐ Trial balance finalised

☐ Bank reconciliation completed

☐ Cash balance verified

☐ Fixed asset register updated

☐ Investments reconciled

Donations

☐ Donation register updated

☐ Corpus donations identified

☐ Donor details available

☐ Foreign contributions separately identified

Expenses

☐ Bills available

☐ Salary records reconciled

☐ Project expenses supported

☐ Capital expenditure identified

Compliance

☐ 12AB status checked

☐ 80G status checked

☐ FCRA status checked, if applicable

☐ Previous Form 10B/10BB reviewed

☐ Form applicability determined

41. Special Focus for FY 2025-26

For the year ending 31 March 2026, NGOs should specifically ask:

Question 1

What is the relevant total income for the ₹5 crore test?

Question 2

Did the NGO receive any foreign contribution?

Question 3

Did the NGO apply any part of its income outside India?

Question 4

Was any transaction undertaken with trustees/interested persons?

Question 5

Were all investments made in permissible modes?

Question 6

Were corpus donations correctly identified?

Question 7

Were accumulation provisions properly documented?

Question 8

Are all donation and expenditure records available?

These questions should form part of the year-end audit checklist.

42. Form 10B vs 10BB — One-Line Rule

For quick reference:

If the prescribed ₹5 crore income condition is exceeded OR any foreign contribution is received OR any income is applied outside India → Form 10B. Otherwise → Form 10BB.

This is the key framework applicable from AY 2023-24 onwards.

43. Important Legal Update for AY 2026-27

The biggest practical takeaway is that Form 10B vs 10BB should be determined using the post-2023 condition-based framework.

The old understanding:

12AB = Form 10B

and

10(23C) = Form 10BB

is outdated for AY 2026-27.

The Income-tax Department’s 2024 clarification specifically explains that the condition-based prescription was introduced with effect from 1 April 2023, applying from AY 2023-24 onwards.

44. Final Compliance Matrix for FY 2025-26

Test Result Form

Relevant total income > ₹5 crore Yes 10B

Relevant total income > ₹5 crore No Check next test

Foreign contribution received Yes 10B

Foreign contribution received No Check next test

Income applied outside India Yes 10B

Income applied outside India No 10BB

Important: The ₹5 crore test must be performed using the statutory computation prescribed under the applicable provisions, not merely by looking at gross receipts.

45. Conclusion

For NGOs, charitable trusts and religious institutions, annual tax compliance goes far beyond filing the ITR.

For FY 2025-26 / AY 2026-27, one of the first questions the finance team and auditor should answer is:

Is Form 10B or Form 10BB applicable?

Since AY 2023-24, the answer is condition-based, not simply based on whether the organisation is registered under Section 12AB or Section 10(23C).

Form 10B generally applies where the prescribed total-income threshold is exceeded, or where the organisation has received foreign contribution, or where any part of its income has been applied outside India.

Form 10BB applies in other cases.

Therefore, every NGO should perform a proper annual applicability review before assigning the audit report to its Chartered Accountant.

The safest professional approach is:

Close Books → Reconcile Donations → Identify Foreign Contribution → Check Foreign Application → Calculate Relevant Total Income → Determine Form 10B/10BB → Complete Audit → Upload Form → Taxpayer Acceptance & Verification → File ITR.

For FY 2025-26, organisations should also ensure that they are using the re-notified Form 10B/10BB applicable from AY 2023-24 onwards, rather than relying on old versions or simply copying the previous year’s filing.