Introduction

Charitable and religious trusts registered under Sections 12AB and 10(23C) enjoy tax exemption on their income, provided at least 85% of the income is applied for charitable purposes during the financial year.

However, trusts may not always be able to utilise the full amount due to delays in projects, ongoing construction, or long-term programmes.

To manage this, the Income Tax Act allows trusts to:

• Defer income, or

• Accumulate income for future application

This can be done using Form 9A and Form 10, as prescribed under Section 11(2) and related rules.

This guide by Bisways Consulting Group explains when these forms are required, how they work, the filing timelines, and compliance conditions.

What Is Form 9A? – Deemed Application of Incom

Form 9A is filed when the trust wants income to be treated as applied in the current year, even though the actual expenditure will take place in the next year.

When to File Form 9A

• ✔ Income received late in the year

• ✔ Income not applied due to operational reasons

• ✔ Grants, donations, or funds earmarked for next year’s use

• ✔ Delayed project execution

Key point: It allows the trust to use funds in the immediately succeeding year while still claiming application for the current year.

What Is Form 10? – Accumulation of Income Under Section 11(2)

Form 10 is used when a trust wishes to accumulate income for up to 5 years for a specific project or purpose.

When to File Form 10

• ✔ Building construction

• ✔ Purchase of land

• ✔ Large educational/medical projects

• ✔ Long-term welfare programmes

• ✔ Capital expenditure plans

The trust must:

• Mention the specific purpose

• Specify the time period (max 5 years)

• Ensure funds are invested in approved modes (Section 11(5))

Key Differences Between Form 9A and Form 10

Documents and Information Required

For Form 9A

• Reason for non-utilisation

• Income to be deemed as applied

• Supporting financial statements

For Form 9A

• Details of accumulated income

• Purpose of accumulation

• Investment details (11(5) approved instruments)

• Duration of accumulation

Step-by-Step Filing Process

Step 1: Log in to Income Tax Portal

Navigate to e-File → Income Tax Forms → Form 9A / Form 10.

Step 2: Select the Relevant Assessment Year

Step 3: Fill in the Required Details

• Nature of income

• Amount to accumulate/defer

• Purpose and duration (for Form 10)

Step 4: Upload Attachments (if required)

Attach all required documents in PDF format.

Step 5: Submit Using DSC/EVC

Step 6: Maintain Records

Trust must keep project and utilisation documents for assessment.

Conditions for Valid Accumulation Under Section 11(2)

To claim benefit under Form 10:

• Funds must be invested only in Section 11(5) instruments

• Clear purpose of usage is required

• Accumulated funds must be used only for that purpose

• Unused funds after 5 years become taxable

• Usage must be traceable and auditable

Common Mistakes to Avoid

• Filing Form 10 without specifying a clear purpose

• Using accumulated funds for unrelated activities

• Not investing in 11(5) approved modes

• Delay in filing (forms must be filed before ITR)

• Incorrect amount reporting

• Accumulation without Board/Trustee resolution

Why These Forms Matter for Trusts

• Prevent taxability of unspent income

• Ensure compliance with Income Tax Act

• Enable long-term planning of welfare projects

• Allow flexibility to manage funds wisely

• Maintain credibility during assessments and audits

Conclusion

Forms 9A and 10 provide charitable trusts with essential flexibility to manage their income and meet long-term project requirements. While Form 9A allows short-term deferment of income application, Form 10 helps accumulate funds for up to 5 years for specific charitable objectives.
Bisways Consulting Group supports NGOs and charitable organisations with Form 9A & 10 filing, Section 11(2) compliance, 12AB/80G advisory, audits, and complete trust taxation assistance.