Trust, Society & NGO Audit in Raipur

Who requires an audit

A trust, society or institution claiming exemption requires its accounts audited by a Chartered Accountant where its total income — computed before applying the exemption — exceeds the basic exemption limit. Because that limit is low, in practice almost every active organisation is caught.

Section 8 companies have a further obligation: a statutory audit under the Companies Act applies to them as it does to every company, regardless of size or income, in addition to the audit required for exemption purposes. The two are separate exercises, though they run off the same books.

Organisations registered under the foreign contribution law have their own audit and annual return requirements as well, which run on a different calendar.

Which audit report form — and a change from this year

For the year currently being audited (FY 2025-26, AY 2026-27), the existing two forms continue to apply, because the year ended before the new law took effect.

Form 10B applies where any one of three conditions is met in the year:

• total income, computed before exemption, exceeds ₹5 crore; or
• the organisation received any foreign contribution during the year; or
• any part of its income was applied outside India

Form 10BB and the consolidation ahead

Form 10BB applies in all other cases.

Filing the wrong one invalidates the exemption claim for that year. This is the single most consequential decision in a trust audit, and it turns on facts that must be established for the current year rather than carried forward. An organisation that received a foreign contribution for the first time moves from one form to the other regardless of its size.

From Tax Year 2026-27 onwards, the two forms are consolidated into one. Under the Income-tax Rules, 2026, the annual audit report for a registered non-profit organisation is furnished in a single form that replaces both — so the choice described above ceases to arise. The distinction still governs the audit being completed now, and will continue to matter for any earlier year still open.

Both reports must be signed by a practising Chartered Accountant with a digital signature and a unique document identification number, and uploaded to the income tax portal.

What the auditor now has to certify

The reporting has become substantially more detailed. The auditor certifies not merely that the accounts are correct but that the organisation has complied with the conditions on which its exemption depends, including:

• Application of income — whether at least 85 per cent of income was applied to charitable purposes during the year
• Accumulation — where it was not, whether the prescribed form was filed to accumulate the shortfall, for a stated purpose and within the permitted period
• Investment norms — whether funds are held only in the modes the law permits
• Benefit to specified persons — whether any part of the income or property has benefited trustees, founders, substantial contributors or their relatives, which is where exemption is most often lost
• Donations — reconciliation of donations reported in the annual donation statement, corpus donations, anonymous donations, and donations from other charitable institutions
• Business activity — where the organisation carries on any incidental business, whether it is properly incidental and separately accounted for

The annual calendar

The return must be filed even where income is fully exempt. Trusts that assume no tax means no return are the ones that discover the three-year cancellation rule the hard way.

The audit report must be filed before the return. A return filed without it is treated as defective, and the exemption claim fails.

The 85 per cent rule, in practice

At least 85 per cent of income must be applied to charitable purposes during the year. The remaining 15 per cent may be retained without condition.

Where a shortfall arises — because a building fund is being accumulated, or a project was delayed — the position can be preserved by filing the prescribed form before the deadline, stating the purpose and the period of accumulation, and investing the accumulated amount in permitted modes. Miss that filing and the shortfall is simply taxed.

This is where most trusts we take on have difficulty, and the difficulty is nearly always in the records rather than in the substance. The organisation did apply its funds properly; it just cannot demonstrate the split between corpus and general receipts, or between revenue application and capital expenditure, from books that were maintained on a receipts-and-payments basis without that distinction in mind. Establishing it at year end is far more work than recording it as it happens.

What changed on 1 April 2026 — and what every organisation should check

The Income-tax Act, 2025 has rewritten the law for charitable organisations more thoroughly than for almost any other category of taxpayer, and the Income-tax Rules, 2026 have renumbered every form that goes with it.

The terminology has changed. Charitable trusts, religious trusts, societies and Section 8 companies are now dealt with together as registered non-profit organisations. The provisions that were previously scattered across many sections of the old Act have been consolidated into a single self-contained part of the new one, with registration, donor-deduction approval, the annual audit report and cancellation each now sitting under their own new section.

Every form number has changed. The applications for provisional and regular registration, the annual audit report, the statement of donations and the certificate issued to donors all carry new numbers from 1 April 2026. The audit report forms have additionally been consolidated, as described above.

Existing registrations continue — with one important exception. An organisation holding a valid registration on 1 April 2026 is automatically treated as a registered non-profit organisation and need do nothing immediately; the registration runs to its existing expiry and is then renewed under the new framework, with the renewal application to be made in advance of expiry rather than after it.

But a registration that had already lapsed before 1 April 2026 does not roll over. An organisation in that position must make a fresh application, and its income for the intervening period is taxable under the ordinary provisions rather than exempt. This is the single most important thing for a trust to check now, because a lapse is often not apparent from the organisation's own records and the consequence is not merely procedural.

Registration is time-limited. Provisional registration runs for a shorter period and regular registration for a longer one, with an extended period available to smaller organisations. Renewal is not automatic and missing the window has consequences beyond the delay itself — in defined circumstances a failure to apply in time can attract tax on the organisation's accumulated assets rather than merely on its income for the year.

For the audit currently being completed, the earlier framework and the familiar form numbers apply, because the year ended before the new law commenced. We handle both, and where a registration certificate refers to one framework and the portal to the other, we reconcile them rather than leaving a client to.

Who we work with in Raipur

Educational trusts and societies running schools and colleges, where fee receipts, corpus contributions and capital expenditure on buildings raise the recurring questions.

Religious and charitable trusts, including those holding immovable property, where the treatment of offerings, the distinction between corpus and general funds, and property income need care.

Hospitals and medical institutions operating on a not-for-profit basis.

Section 8 companies, which carry both a statutory audit under the Companies Act and the exemption audit, and which are increasingly the vehicle of choice for organised charitable work.

Organisations receiving corporate social responsibility funding. Raipur's industrial base — steel, cement and mining — generates substantial CSR expenditure, and the companies making it require the recipient to hold current registrations and to account for the funds specifically. An organisation that lets its registration lapse loses that funding immediately, and the audit is what evidences the position.

Organisations receiving foreign contributions, which face an additional and separate compliance regime with its own audit and reporting.

Scope of our work

We determine which audit report form applies, testing the three conditions against the year's actual facts; conduct the audit and certify compliance with the application, accumulation, investment and specified-person conditions; reconcile donations to the annual donation statement and identify donations that must be excluded from it; prepare and file the audit report and ITR-7 within their respective deadlines; file the accumulation form where a shortfall arises; and advise on record-keeping so that the corpus, application and capital distinctions are captured through the year rather than reconstructed at the end of it.

Where an organisation has fallen behind — unfiled returns, a lapsed registration, a shortfall not formally accumulated — we establish the position and what can still be regularised, which is usually more than the trustees expect but less than they hope.