12A and 80G Annual Compliance for Trusts and NGOs: ITR-7, Audit, 85% Rule and Form 10BD

Last updated 26 September 2026

What must a trust or NGO with 12A and 80G do every year?

A registered trust must apply its income to its objects, keep audited accounts where required, file ITR-7 even when no tax is payable, and report donations if it holds 80G. Registration is not a one-time event, and missing the yearly steps can cost the exemption or your donors' deductions.

Say Suresh is the treasurer of a registered society in Pune that receives Rs 40 lakh a year in donations and grants. He believed the 12A certificate meant no more filings. In fact, he has an audit report, an ITR-7 and a donation statement to file every year, and each has its own due date.

Due dates are often extended, so confirm the current date with your CA. Our validity and renewal guide covers the separate renewal clock.

What is the 85% application rule?

The 85% rule requires a registered trust to apply at least 85% of its regular income to its charitable or religious objects in the year it is received. The remaining 15% is free to keep. Any shortfall is taxable unless it is covered by deemed application or accumulation, and both must be claimed by the return due date.

Ways to handle a shortfall

• Deemed application. Filed on the old Form 9A, reportedly Form 108 under the new Act, to treat certain spending as applied.
• Accumulation. Filed on the old Form 10, reportedly Form 109 under the new Act, to set money aside for a later objective. Accumulated funds must be spent within five years.

Miss the filing and the unspent amount can be taxed. Keep a simple year-end schedule showing income received, amount applied and amount accumulated, so your CA can prepare the form before the return is filed. New-Act form numbers here are second-hand, so treat them as pointers, not final citations.

The rule assumes your accounts are kept properly, which is why the documents behind your registration matter for every later year too.

Does your trust need an audit report, and on which form?

A trust needs an audit report where its total income before the exemption exceeds the basic exemption limit. The report is filed online on the old Form 10B or 10BB for FY 2025-26, and the new Act reportedly replaces both with Form 112. It should be filed about one month before the ITR-7 due date.

The auditor must be a Chartered Accountant, and the audited accounts should match the figures in the return. Mismatches between the audit report, the ITR-7 and the donation statement are a common reason for department queries. Book the audit early, not in the last week of September.

Many small trusts assume they are below the threshold and skip the audit. Calculate your income before exemption, not after it, since that is the figure the rule looks at. If in doubt, ask your CA on a callback.

When do you file ITR-7?

ITR-7 is the return for registered trusts and non-profits, and it must be filed even when no tax is payable. For audit cases the due date is 31 October of the assessment year, and a belated return is reported as 31 December.

FY 2025-26 (assessment year 2026-27) filings stay under the old Act, so the forms named above still apply for that year. From tax year 2026-27, the new Act's numbering applies, with the return due date reportedly in section 263(1). Your CA will tell you which form the portal shows.

Filing the return late can put deemed application and accumulation claims at risk, because those must be made by the due date. That is why compliance-savvy trusts treat 31 October as a hard stop, even though a belated option exists.

What is Form 10BD and why does it matter for 80G?

Form 10BD is the annual statement of donations that an 80G-approved organisation files with the income tax department by 31 May after the financial year. Once it is filed, donors receive a Form 10BE certificate, which is the document they use to claim the deduction.

Under the Income-tax Act 2025, the statement and the certificate are reportedly renamed Form 113 and Form 114, still due by 31 May after the tax year. An unreported donation generally cannot be claimed by the donor, so a missed filing hurts your supporters, not only you.

• Late fees and penalties exist. One source reports up to Rs 1,00,000 in penalty with a daily late fee, but we could not verify it, so ask your CA for the current figure.
• Receipts should carry your 80G approval number. Donors also need non-cash payment for gifts above Rs 2,000.
• Keep a clean donor register. PAN and address details make the statement easy to prepare.

What mistakes put your exemption at risk?

The most common mistakes are unreported donations, spending on related persons, and an unfiled 10BD. Each can cost either your exemption or your donors' deductions. Tax rules also treat anonymous donations specially, and they are generally taxed at a higher rate, with thresholds your CA should confirm.

1. Benefit to related persons. Payments to trustees or their relatives above reasonable value can jeopardise registration.
2. Not filing the donation statement. Donors lose their deduction even if your approval is valid.
3. Letting registration expire. See the renewal timelines.
4. Objects and activities drifting apart. Read our note on rejection reasons, as the same gaps cause trouble later.
5. Cash-heavy giving. Cash gifts above Rs 2,000 are not eligible for the donor deduction.

What records should you keep all year?

Keep a small set of records every month, because each annual filing above is only as good as the books behind it. Trusts that leave everything to March usually discover gaps they can no longer fix.

• A donation register with donor name, PAN, address, amount, date and mode of payment. This feeds the yearly donation statement directly.
• An application-of-income schedule that tracks how much of the year's income has gone to your objects, so the 85% test is a running figure, not a surprise.
• Bank statements and vouchers that reconcile with the books, since the auditor and the department both compare them.
• Minutes of trustee or board meetings recording major decisions, especially any payment to a trustee, director or relative.
• Copies of every order and certificate, including your registration orders and their expiry dates.

A simple calendar reminder for 31 May, 30 September and 31 October, plus your registration expiry minus six months, covers most of the risk.

What does Shunya cover after registration?

Shunya's 12A and 80G page says the CA gives you guidance on the annual Form 10BD filing after your certificate is delivered. It does not state that Shunya prepares ITR-7, audit reports or annual returns as part of the registration package, so ask your CA about those on the free callback.

Shunya's professional fee for registration is ₹1,999, and government fees, statutory costs and third-party charges are billed separately. A practising CA reviews every filing.

Start on the 12A and 80G registration page with a free callback or pay the professional fee online. You can also WhatsApp or call +91 80809 18797. Companies registered under Section 8 face additional ROC filings, covered in our Section 8 company guide.

This article is for general information only. For your specific situation, consult a practicing CA.