NGO’s Books of account & other documents to be kept and maintained- New IT Rule 17AA
- Central Board of Direct Taxes established new rule 17AA via income tax Notification No. 94/2022 dated August 10, 2022, which specifies the books of account and other documents that must be kept by each fund, institution, trust, university or other educational institution, hospital or other medical institution or non-governmental organization as required by section 12A(1)(b)(i) or or under clause (a) of tenth proviso to section 10(23C).
- Ledger books & other records may be maintained in written form, digital form, electronic form, printouts of data saved in electronic form, digital form, or any other type of electromagnetic data storage device.
- The registration office of non-governmental organization, or any other location in India that the management may decide by resolution and where such a resolution is adopted, shall be the site where the books of accounts & other documents shall be held and maintained by non-governmental organization. They must preserve books of accounts and other records in the format, location, and way that may be required.
- However if a resolution has been adopted, we must inform the jurisdictional AO’s in writing within 7 days, providing the complete address of the other location.
- Books of account & other documents must be stored and maintained for a minimum of 10 years After the completion of the relevant AY.
- Non-governmental organization should be keep in mind that below adjustment was made by Finance Act of 2022:
- Rule 17AA, a new regulation, mandates the maintenance and preservation of books of accounts and other records by all funds, organisations, trusts, colleges and other educational institutions, as well as hospitals and other healthcare facilities. In addition to the books of accounts, there are additional records for all projects and institutions, income from various sources, applications of income, income accumulated or set aside, money invested or deposited, voluntary contributions received, corpus received, loans and borrowings recorded, records of specific individuals recorded, etc.
Books of Accounts are required be maintained by NGO
Below books of accounts are Needed to be maintained by an trust or institution or non-governmental organization registered u/s 10(23C) or section 12A.
- ledger; cash book; journal.
- Original bills & receipts in respect of payments of NGO expenses
- bills or counterfoils of receipts issued by the NGO/ Assessee
- Any other book that may be needed to be keep to be maintained in order to provide a true and fair view of the state of the affairs which explain the transactions effected
Few other related documents are needed to be maintained by an trust/ institution or non-governmental organization registered U/s 10(23C) or section 12A.
- Document and related Record of all the projects and institutions run by the person containing details of their name, address and objectives;
- Any other record of income of person during the earlier year, including details of voluntary contribution, income from property held under trust & any other income.
- The Document & related Records related to application of income
- Records related to application out of accumulated income
- The Document and related record of voluntary contribution made with a specific direction that they shall form part of the corpus
- Records related to contribution received for the purpose of renovation or repair of religious institutions notified u/s 80G(2)(b)
- Document and related record of loans and borrowings
- The Document and related record of properties held by NGO/ Assessee
- Records of specified or related persons specified u/s 13(3) for NGO
- Above said income tax provision is introduced in the line of mandatory maintenance of books of accounts by specified persons carrying on business or profession as per the provisions of income tax act section 44AA read along with Rule 6F under the Income tax Act or rules their under.
- According to the Central Board of Direct Taxes notification of New Rule 17AA, the above accounts & books and related above documents are mandatory needed to be maintained by NGO or Trust in the specified form & manner & at the specified place of NGO office,
- It should be noted that, except for those Trusts or NGOs whose donation income is less than Rs 250000 in a financial year, there is no distinction made between smaller or larger Trusts or NGOs with respect to the maintenance of the above-mentioned books of accounts and other records as per Rule 17AA. All charitable trusts and NGOs are expected to retain a long list of other documentation, which includes records of the projects they have undertaken, the donations of time or money they have received, information about the loans and investments they have made, and much more.
Small trusts and NGOs will undoubtedly find it challenging to adhere to Rule 17AA's comprehensive and detailed record-keeping requirements, which call for a Trust or NGO to maintain a variety of records. The cost of compliance will undoubtedly rise as a result, and smaller trusts and NGOs may find it difficult to comply.
These records do not necessarily need to be kept in an expensive piece of software. Even Excel Spreadsheets can be used to keep these records. Notwithstanding being regulatory requirements, one must abide by these rules.