Trust Audit Services
Statutory & Tax Audit for Charitable Trusts, NGOs and Religious Organisations — Form 10B/10BB, FCRA & Charity Commissioner
A trust audit is the cornerstone of annual compliance for any registered charitable, religious, or educational trust. Without a properly conducted annual trust audit, a trust risks losing its Section 11 income tax exemption, failing to satisfy the Charity Commissioner, losing its 80G donor deduction eligibility, and exposing trustees to personal liability for misapplication of trust funds.
What Does a Trust Audit Examine?
Income Classification & Recording
Correct categorisation of corpus donations (excluded from 85% computation), general donations, programme grants, FCRA receipts, investment income, and rental income — each with different tax treatment.
The 85% Application Rule
Verification that at least 85% of total income (before Section 11 exemption, excluding corpus donations) is applied for charitable purposes. Programme expenditure, staff salaries, and capital assets for charitable activities all qualify.
Section 11(2) Accumulation
Verification that Form 10 accumulation notices are filed for specific purposes within 5 years, and that prior year accumulations are being applied as specified.
Section 11(5) Investment Compliance
Review of complete investment portfolio against specified modes — government securities, UTI units, notified mutual funds, scheduled bank deposits, post office deposits, PSU bonds. Corporate FDs and private equity do not qualify.
80G & Form 10BD Compliance
Verification of donation receipts in prescribed format, donation register completeness, Form 10BD filing by 31 May, and Form 10BE certificate issuance to each donor by 31 May.
FCRA Compliance
Separate FCRA bank account (SBI), separate books of account, 20% administrative expenditure limit, FC-6C filing within 45 days of receipt, annual FC-4 return by 31 December, sub-granting restrictions (MHA prior approval required).
Who Needs a Trust Audit?
| Trust Type | Audit Trigger | Key Form | Deadline |
|---|---|---|---|
| Section 12AB Trusts | Total income before Sec 11 exemption > Rs. 2.5 lakh | Form 10B or Form 10BB | Before ITR-7 (31 October) |
| Large/Complex Trusts | Income > Rs. 5 crore OR FCRA funds OR Sec 11(2) accumulation OR non-Sec 11(5) investments | Form 10B (detailed) | Before ITR-7 (31 October) |
| Smaller Trusts | None of the Form 10B criteria | Form 10BB (simplified) | Before ITR-7 (31 October) |
| Maharashtra Public Trusts | All trusts registered under Maharashtra Public Trusts Act 1950 | Schedule VIII Accounts | 30 September (Charity Commissioner) |
| FCRA-Registered NGOs | Any receipt of foreign contribution | Separate FCRA accounts + FC-4 | 31 December (FC-4 Annual Return) |
| 80G Trusts | All trusts with 80G registration | Form 10BD + Form 10BE | 31 May |
Step-by-Step Trust Audit Process
Pre-Audit Engagement Review & Compliance Calendar
Review trust deed, 12AB certificate, 80G registration, FCRA registration, prior year Form 10B/10BB and ITR-7, Charity Commissioner submission, and all regulatory correspondence. Identify prior year gaps and establish audit timeline with milestones.
Books Collection & Completeness Verification
Collect cash book, bank statements for all accounts (including FCRA designated account), donation register, grant register, expense vouchers, investment records, and property register. Verify regular maintenance — not year-end reconstruction from bank statements.
Income Classification & Corpus Donation Verification
Categorise all receipts — corpus (with specific donor designation and Section 11(5) investment), general donations, programme grants, FCRA receipts, investment income. Verify corpus donations are excluded from the 85% computation base.
Expenditure Review & 85% Application Computation
Review every expenditure for connection to charitable objects per the trust deed. Classify programme vs administrative expenses. Prepare 85% application computation in Form 10B/10BB format. Identify shortfalls early to allow accelerated spending or Section 11(2) notice filing.
Investment Portfolio Review — Section 11(5) Compliance
Complete investment portfolio reviewed against Section 11(5) list. Investment compliance matrix prepared. Non-compliant investments identified with advice on liquidation and reinvestment timeline and process.
FCRA Compliance Review (Where Applicable)
Separate review of FCRA designated bank account, all FC-6C filings, FCRA-specific books, and administrative expenditure percentage. Prepare separate FCRA income/expenditure account and balance sheet for FC-4 return with CA certification.
80G Compliance & Form 10BD Verification
Verify donation receipts in prescribed format, donation register completeness and accuracy, Form 10BD preparation with correct donor PAN and donation details, and Form 10BE issuance process to ensure donor 80G claims are supported.
Form 10B/10BB Preparation & Charity Commissioner Accounts
Prepare Form 10B or Form 10BB, certify and e-file on Income Tax portal. Prepare accounts in Maharashtra Charity Commissioner Schedule VIII format. Coordinate both filings within their respective deadlines.
Why Choose N D Savla & Associates?
- Multi-framework expertise — Income Tax Act, Maharashtra Public Trusts Act, FCRA, and sector-specific regulations all covered in one engagement
- Form 10B vs 10BB assessment — we determine the correct form at the start of every engagement
- FCRA specialists — complete FC-4 preparation, FCRA bank account review, and CA certification as required by Ministry of Home Affairs
- Early 85% computation — computed by August so the trust has time to accelerate expenditure before year-end if needed
- Form 10BD preparation — complete donor statement preparation and filing by 31 May, ensuring 80G donor deduction availability
- Maharashtra Charity Commissioner format — Schedule VIII accounts prepared as a standard part of every trust audit engagement
- Guaranteed 31 October filing — trust audit initiated by July; Section 11 exemption never at risk for our clients
Frequently Asked Questions
What is the difference between Section 12A, 12AA, and 12AB?
What happens if Form 10B/10BB is not filed before ITR-7?
How is the 85% income application requirement verified in practice?
Can a trust receive foreign donations without FCRA registration?
What is Form 10BD and how does it relate to the trust audit?
What if the trust fails to apply 85% of its income?
Protect Your Trust's Exempt Status — Start the Audit by July
Form 10B/10BB must be filed before 31 October. Our integrated trust audit covers income tax audit, Charity Commissioner accounts, FCRA certification, 80G compliance, and Form 10BD — all from one specialist team.
Contact Us- 📞 +91 9821 832 683 | +91 9765 000 966
- ✉ nainitsavla@savlagroup.in
- 🏢 Baner Business Bay, Pune | Mon–Sat 10AM–7PM