S. Sahoo & Co.

Chartered Accountants

UNION BUDGET
2023
&
NGOs

S. Sahoo & Co.

Chartered Accountants
14 Palam Marg, Vasant Vi har,
New Delhi - 110057
Mobile: 9810212917
E-mail: s.sahoo.co@gmail.com
Web: www.ssahoo.com
Our Branches:
Mumbai - Chennai - Jaipur - Raipur - Bhubaneswar
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S. Sahoo & Co. Chartered Accountants

CONTENTS
Amendments under Income Tax Act
1. Reduction of the time limit to furnish the Form 10 & 9A to 31st August
from 31st October
2. Transfer to other Organizations & Claim of Expenses
3. Provide for payment of tax on assets if a trust does not apply for
exemption after getting “provisional exemption” and for “re-exemption”
after “expiry of exemption”
4. Combining provisional and regular registration in some cases
5. Conditions that are required to be satisfied in the case of application
(Expenditure) for charitable or religious purposes reclarified
6. Clarity on tax treatment on replenishment of corpus and on repayment of
loans/borrowings
7. Amendment of section 194R
8. Donations to Fund not eligible for exemption u/s 80G now
9. Amendment in 206AB Declaration & TDS of non-filers of Income Tax
Return

Amendments under Goods & Services Tax Act

10.Composition Scheme for sales through E-commerce portals
11.No Input on CSR Expenditure
12.Integration of GST Portal with other portals like Income Tax, ROC etc

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S. Sahoo & Co. Chartered Accountants

Amendments under Income Tax Act

1. Reduction of the time limit to furnish the Form 10 & 9A to 31st

August from 31st October

Presently the due date for furnishing Form 10 & Form 9A is same as that of the
Annual Income Tax Return. However, the audit report in form 10B/10BB has to be
filed one month before the due date of filing the Income Tax Return by the Auditors
which includes the details of Form 10/9A therein. Since the due date of furnishing
Form 10B/10BB is one month before the due date of furnishing the ITR, the auditors
find it difficult to report.
Proposal in the Budget:
It is proposed to provide for filing of Form No. 10/9A at least two months prior to the
due date specified under sub-section (1) of section 139 for furnishing the return of
income for the previous year.
Effective Date:
These amendments will take effect from 1st April, 2023 and will accordingly apply to
the assessment year 2023-24 and subsequent assessment years.

2. Transfer to other Organizations & Claim of Expenses

At present, the entire amount of funds transferred to partner NGOs is treated as

expenses.

Proposal in the Budget:

It is proposed that only 85% of the eligible donations made by a trust or institution to
another trust shall be treated as application.

Effective Date:
These amendments will take effect from 1st April, 2024 and will accordingly apply in
relation to the Assessment Year 2024-25 and subsequent assessment years.

3. Provide for payment of tax on assets if a trust does not apply

for exemption after getting “provisional exemption” and for
“re-exemption” after “expiry of exemption”

Instances have come to the notice of govt. where:

• certain trusts and institutions have not applied for the regular registration after
taking the provisional registration.
• Further, there may be possible instances where the trusts and institutions will
not apply for re-registration after the expiry of 5 years/3 years.

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This will result in the following unintended consequences

• Once a trust or institution enters in-to exemption regime, it is allowed to exit

on payment of tax at the rate of maximum marginal rate on its accreted income
(difference between the fair market value of assets and liabilities). This is
because of the reason that the income of the trust or institution has been
exempted from tax and the accreted income of the trust represents the income
on which tax has not been paid and appreciation thereof.
• By not applying for re-registration/approval or registration/approval, the trust
gets an easy route to exit without payment of the tax on accreted income.

Proposal in the Budget:

This amendment seeks to impose a levy in the nature of an exit tax which is attracted
when the organization is converted into a non-charitable organization or gets merged
with a non-charitable organization or a charitable organization with dissimilar objects
or does not transfer the assets to another charitable organization.

Effective Date:
These amendments will take effect from 1st April, 2023 and will accordingly apply to
the assessment year 2023-24 and subsequent assessment years.

4. Combining provisional and regular registration in some cases

Proposal in the Budget:

• Presently the trusts and institutions are allowed to make application for the
provisional registration before the commencement of activities under section
12A & 80G of Income Tax Act and

• The trusts and institutions, which have already commenced their activities,
shall make application for a regular approval.

• The application for regular approval shall be examined by the Principal

Commissioner or Commissioner as per the detailed procedure after examining
the records and where the Principal Commissioner or Commissioner is
satisfied about the objects and genuineness of the activities and compliance of
other requirements provided in law, registration or approval in such cases shall
be granted for 5 years

• The Principal Commissioner or the Commissioner shall pass and order

granting or rejecting such applications within 6 months calculated from the
end of the month in which such application was received.

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Effective Date:

These amendments will take effect from 1st October, 2023.

5. Conditions that are required to be satisfied in the case of

application (Expenditure) for charitable or religious purposes
reclarified

- Such application should not be in the form of corpus donation to another

trust or institution [twelfth proviso to clause (23C) of section 10 of the Act for
the trust or institution under first regime and Explanation 2 to sub-section (1) of
section 11 of the Act for the trust or institution under second regime].

- TDS, if applicable, should be deducted on such application [thirteenth proviso

to clause (23C) of section 10 of the Act for the trust or institution under first
regime and Explanation 3 to sub-section (1) of section 11 of the Act for the trust
or institution under second regime].

- Application whereby payment or aggregate of payments made to a person in

a day exceeds Rs 10,000 in other than specified modes (such as cash) is not
allowed (thirteenth proviso to clause (23C) of section 10 of the Act for the trust or
institution under first regime and Explanation 3 to sub-section (1) of section 11 of
the Act for the trust or institution under second regime).

- Carry forward and set off of excess application is not allowed [Explanation 2
to clause (23C) of section 10 of the Act for the trust or institution under first
regime and Explanation 5 to sub-section (1) of section 11 of the Act for the trust
or institution under second regime].

- Application is allowed in the year in which it is actually paid [Explanation 3 to

clause (23C) of section 10 of the Act for the trust or institution under first regime
and Explanation to section 11 of the Act for the trust or institution under second
regime].

- Application should not directly or indirectly benefit any person referred to in

sub-section (1) of section 13 of the Act and the income of the trust or
institution should not amount to any benefit to such person [twenty-first
proviso to clause (23C) of section 10 of the Act for the trust or institution under
first regime and clause (c) of sub-section (1) of section 13 of the Act for the trust
or institution under second regime].

- Application should be in India except with the approval of the Board in

accordance with the provisions of clause (c) of sub-section (1) of section 11 of the
Act.

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6. Clarity on tax treatment on replenishment of corpus and on

repayment of loans/borrowings

Proposal in the Budget:

- The application out of corpus or loans or borrowings before 01.04.2021 should not
be allowed as application for charitable or religious purposes when such amount is
deposited back or invested in to corpus or when the loan or borrowing is repaid.
- If the trust or institution invests or deposits back the amount into corpus or repays
the loan within 5 years of application from the corpus or loan, then such
investment/depositing back in to corpus or repayment of loan will be allowed as
application for charitable or religious purposes.

Effective Date:

These amendments will take effect from 1st April, 2023 and will accordingly apply to
the assessment year 2023-24 and subsequent assessment years.

7. Amendment of section 194R

Any benefit or perquisite given to a resident in the course of business or profession

whether in wholly cash / wholly kind / partly cash and partly kind.
Earlier 194R did not speak about “wholly cash” due to which in kind benefits were
included for the purpose of calculating the limit of Rs. 20,000/-.
Now, as a result of amendment, any benefit or perquisite given as wholly cash /
wholly kind / partly cash and partly kind in total exceeding Rs. 20,000/- shall be liable
for tax deduction.

8. Donations to Fund not eligible for exemption u/s 80G now

Budget 2023 proposes removal of:

a. Jawaharlal Nehru Memorial,
b. Indira Gandhi Memorial and
c. Rajiv Gandhi Foundation
from 80G Exemption

9. Amendment in 206AB Declaration & TDS of non-filers of

Income Tax Return

206AB is not applicable in the following cases:

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S. Sahoo & Co. Chartered Accountants

(i) a non-resident who does not have a permanent establishment in India; or

(ii) a person who is not required to furnish the return of income for the assessment
year relevant to the said previous year and is notified by the Central Government in
the Official Gazette in this behalf.”.

Even in the absence of PAN, the TDS will be done at normal rate rather than double
rate.

Amendments under Goods & Services Tax Act

10. Composition Scheme for sales through E-commerce portals

Proposal in the Budget:
Composition Scheme can now be availed even by Supplier of Goods or services
selling on e-commerce portals

Earlier suppliers supplying Goods or services selling on e-commerce portals were not
allowed to register themselves under the Composition Scheme.

11.No Input on CSR Expenditure

Proposal in the Budget:
ITC u/s 17 sub-section (5) of said section is being amended so as to provide that:
“Input tax credit shall not be available in respect of goods or services or both received
by a taxable person, which are used or intended to be used for activities relating to his
obligations under corporate social responsibility referred to in section 135 of the
Companies Act, 2013”.

12. Integration of GST Portal with other portals like Income Tax,
ROC etc.
Proposal in the Budget:
Section 158A Inserted – Sharing of the information by GST Portal to other Systems
notified by Government furnished by the registered person in his return or in his
application of registration or in his statement of outward supplies, or the details
uploaded by him for generation of electronic invoice or E-way bill or any other
details, as may be prescribed, on the common portal with such other systems, as may
be notified.

“CHINTA NAHI”
“CHINTAN”

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