Audit & Return Filing for Trusts and NGOs

What is audit and return filing for trusts and NGOs?

Registered charities must meet an annual cycle of compliance to keep their tax exemption: accounts audited by a chartered accountant, an audit report in the prescribed form, an income tax return, and statements of donations received. Societies and Section 8 companies also have filings under their own laws.

The rules are strict. Missing an audit report or filing the return late can mean losing the exemption for the year, so the whole surplus becomes taxable.

The key terms

The core of charity compliance:

Audit report

Form 10B for larger charities and Form 10BB for others, under the 1961 Act.

ITR-7

The income tax return form for trusts, societies and Section 8 companies claiming exemption.

85% application

At least 85% of income must be applied to charitable purposes in the year, or accumulated properly.

Accumulation

Income can be set aside for up to five years for specific purposes, by filing the prescribed form.

Corpus donations

Donations specifically for the corpus, treated differently from general donations.

Form 10BD / 10BE

The annual donation statement filed by 80G-approved charities, and certificates issued to donors.

Anonymous donations

Donations without donor identity, taxed at a special rate beyond limits.

Why it matters

Charity compliance has little tolerance for delay:

Exemption depends on it

Late audit reports or returns can cost the exemption for the year.

Donor deductions

Donors can only claim deductions if Form 10BD is filed and certificates issued.

85% rule

Shortfalls in application are taxed unless properly accumulated.

Registration safety

Repeated non-compliance can lead to cancellation.

Funder expectations

CSR and grant funders expect audited accounts and utilisation reports.

State filings

Societies and trusts may have state filings too.

Law changes

The 2025 Act changes forms and some rules from tax year 2026-27.

Who is this for?

FCRA returns are covered by our FCRA compliance service, and can be combined with this.

Annual filings at a glance

The main filings under the 1961 Act:

What we'll need from you

Books of account

Cash, bank and ledger records for the year.

Donation records

Donor names, PAN, amounts and modes.

Registration documents

12AB, 80G and other registration details.

Grant agreements

CSR and grant agreements with utilisation terms.

Asset records

Fixed assets and investments.

Minutes

Board or trustee resolutions, including accumulation decisions.

Pricing depends on the size of the organisation and number of donations.

How we handle annual compliance

Our annual cycle:

1. 1

   Close the books

   Accounts are finalised, with donations and grants correctly classified.

2. 2

   Check application

   Application of income is calculated against the 85% rule.

3. 3

   Plan accumulation

   Where needed, accumulation is approved and the form filed.

4. 4

   Audit

   The accounts are audited and the audit report filed.

5. 5

   File the return

   ITR-7 is filed by the due date.

6. 6

   Report donations

   Form 10BD is filed and certificates issued to donors.

Through the year

Good practice between filings:

Record donors properly

Collect PAN and details for every donation.

Avoid cash

Keep cash donations and payments within limits.

Track application

Monitor spending against income through the year.

Use accumulated funds

Spend accumulated amounts within the period allowed.

Grant reporting

Prepare utilisation reports for funders.

State filings

File annual returns with the Registrar of Societies or ROC.

Benefits and responsibilities