By the time this piece reaches our desks, I am sure most of us would be taking a sigh of relief from the hectic last days of filing of income tax returns for companies and filing of ROC returns and not to forget the newly introduced Form 10BB and Form 10B for Charitable Trusts.

If we look at the recent history of the amendments made by the Finance Ministry in the past 2-3 years, it becomes very perceptible that the intent of this Government is very clear to pluck down the laundering activities which were highly rampant under the garb of charitable activities.Misuse of the form of trusts and NGOs had become so rampant that even the Delhi High Court had publicly remarked that 99% of the NGOs in India were “Fraud” and “Money Making Devices”. It was therefore incumbent upon the Government to introduce laws to tighten the noose around these fraudulent entities and hence a series of amendments were brought about in the laws governing these trusts.

The revised audit report, as we are aware, requires reporting of identities of the relatives of the trustees, settlors and substantial contributors along with the information about electronic and other modes of payments. Also, donations made by foreigners & NRIs, though in INR needs to be separately reported. One of the amendments made require the charitable trusts to apply for renewal of registration six months before the date of cancellation failing which the trust shall lose its exemption status and the entire income shall be taxable at the maximum marginal rate. A slight error by the charitable trust might cost heavy to them. While the intention of the Department is not questionable, the new forms are in fact too complex and burdensome for smaller genuine charitable trusts. Most of the trusts find it difficult, if not impossible, to furnish all the required details considering the limited resources and expertise available with them and their accounting staff. Further, the burden from the trustees normally percolate onto the practicing professionals who need to burn the midnight oil to make sure these cumbersome and complex compliances are carried out in time. At the same time, the trustees are not willing to spend an equivalent amount on professional fees since they feel as they are doing something for charity so should the professional do and therefore this area of practice is slowly diminishing as far as professionals are concerned.

While large trusts belonging to the who’s who of the countries and hospitals have their arrangements to meet these regulations, lakhs of charitable trusts which operate from humble offices are facing the real challenge of reporting these details and comply with the law. Whether it is the process of re-registration of charitable trusts or filing the extensive audit report in Form 10BB, Charitable Trusts have a tough task to manage their compliance calendars.

In our country, lot of philanthropy takes place through charitable trusts and therefore the Government ought to maintain a balance by empowering the smaller trusts and some freedom to legitimate and genuine trusts. It is also the responsibility of our Institutes and Associations to apprise the Ministry of the practical difficulties that are being faced by the trusts and identify possible solutions to enable smooth operations for genuine trusts.

It is also the need of the hour for the Department and the Ministry to enhance their supervision and surveillance over the unscrupulous elements rather than punishing the honest. While the laws in our country have always been framed with the right intention, the implementation of the same in its right spirit have always been questionable with the powerful class “managing everything” and the common man finding it tough in managing “everything”..