Form No. 10

Form No. 10 Under the Income-Tax Act: The 2026 Complete Guide for Trusts and Approved Institutions

Form No. 10 is the statutory notice a charitable or religious trust, scientific research association, or approved institution files under Rule 17 of the Income-tax Rules, 1962, to accumulate income it cannot apply to its objects within the current financial year. Filed electronically on incometax.gov.in before the Section 139(1) return due date for the relevant Assessment Year, it protects the unspent balance from becoming taxable — provided the purpose is specific, the period does not exceed five years, and the funds are invested in modes permitted under Section 11(5) of the Income-tax Act, 1961. Get any one of those three wrong and the exemption evaporates.

The Legal Framework: Section 11(2), Rule 17, and the 85% Threshold

The fundamental bargain for a trust registered under Section 12A or Section 12AB is straightforward: apply at least 85% of your income to charitable or religious purposes in the same financial year, and the entire income qualifies for exemption under Section 11(1)(a) of the Income-tax Act, 1961. The remaining 15% may be retained as a permissible surplus.

The difficulty arises when a trust genuinely cannot spend 85% in one year — not from any lack of intent, but because a project is large, construction will span several years, or a significant donation arrived close to 31 March. Section 11(2) provides the statutory escape valve: a trust may accumulate income beyond the 85% floor for a specific purpose and for a period not exceeding five years, provided it gives prior notice to the Assessing Officer (AO) in the prescribed form.

That prescribed form is Form No. 10, governed by Rule 17 of the Income-tax Rules, 1962. The accumulated amount must simultaneously be placed in investment modes specified under Section 11(5). All three conditions — specific purpose, maximum five-year period, and Section 11(5)-compliant investment — must be satisfied concurrently. If any one fails, Section 13(9) steps in to deem the entire accumulated amount taxable as income of the trust in the year of violation.

Statute reference map for your compliance file:

• Section 11(1)(a): The 85% application rule and base exemption
• Section 11(2): The accumulation provision
• Section 11(3): Deeming of unspent accumulated funds as taxable in the year following expiry
• Section 11(5): Permitted investment modes for accumulated funds
• Rule 17: Form and manner of notice — Form No. 10
• Section 13(9): Loss of exemption where Section 11(5) modes are violated

Form 9A vs Form 10: Two Tools, Two Distinct Scenarios

Practitioners routinely conflate Form 9A and Form 10 because both address the shortfall in 85% application. They are not interchangeable and cannot substitute for each other.

Form 9A — Rule 17(2) applies when income was received too late in the year to be applied before 31 March. A government grant credited in February, a donation received in mid-March — amounts that were genuinely unrealisable for charitable expenditure in time. The trust files Form 9A to declare that the income will be applied in the immediately following financial year and is treated as "deemed applied" in the year of receipt. The carry-forward under Form 9A is limited to one succeeding year, not five.

Form 10 — Rule 17 applies when the trust is deliberately accumulating income for a defined future purpose: building a hospital ward, funding a multi-year research programme, restoring a heritage temple — projects whose execution spans a period longer than a single financial year.

The practical distinction: Form 9A is an administrative deferral; Form 10 is a purposive commitment. A trust can file both in the same year if it has two separate categories of unspent income — one that was unreceived and one that is being ring-fenced for a future project. Each form must be filed electronically before the Section 139(1) deadline. Filing the wrong form leaves the income unprotected even if the underlying intent is genuine.

Who Must File and When: Deadlines for AY 2027-28

The following entities may invoke Section 11(2) and are therefore required to file Form 10 to protect accumulated income:

• Trusts registered under Section 12A (older registrations grandfathered in) or Section 12AB (current regime post-2020 reform)
• Funds and institutions approved under Section 10(23C)(iv), (v), (vi), or (via) — hospitals, educational institutions, and similar bodies approved by the Principal Commissioner or Commissioner of Income Tax
• Scientific research associations under Section 35 that also claim exemption under Section 11
• Any institution for which the 85% application rule and accumulation mechanism applies

The non-negotiable deadline: Form 10 must be filed on or before the due date for furnishing the return of income under Section 139(1). For trusts required to get their accounts audited — which covers most Section 12AB entities — that due date is 31 October of the Assessment Year.

For FY 2026-27 / AY 2027-28, the Form 10 deadline is 31 October 2027.

No statutory condonation mechanism exists for a missed Form 10 deadline in the same way as for delayed ITR filings. The Income Tax Appellate Tribunal has consistently held, across multiple benches, that the due-date requirement under Rule 17 is mandatory and not directory — a post-deadline Form 10 grants no Section 11(2) protection for that year. Build the Form 10 filing into the September calendar, not the October return-filing sprint. The trustees' board resolution and project documentation must be in place before the form is submitted.

How to File Form 10 on the Income Tax Portal — Step by Step

Filing is entirely electronic on incometax.gov.in. No paper submission is accepted.

1. Log in using the trust's PAN and a valid Digital Signature Certificate (DSC) of an authorised signatory — typically the managing trustee, secretary, or authorised director. Electronic Verification Code (EVC) is not available to trusts that are mandated to sign returns with a DSC.

1. Navigate to e-File → Income Tax Forms → File Income Tax Forms. Under the Non-ITR Forms tab, search for Form 10.

1. Select Assessment Year 2027-28 (for FY 2026-27 income).

1. Enter the following details:
2. Trust PAN and Unique Registration Number (URN) issued under Section 12AB — both must match the portal records exactly
3. The amount being accumulated in rupees
4. The specific purpose for which accumulation is sought (see next section for language guidance)
5. The period of accumulation — state a definite end date, e.g., "3 years from 1 April 2027 (i.e., by 31 March 2030)", not merely "5 years"
6. The mode of investment under Section 11(5) in which the funds are or will be placed

1. Attach supporting documents:
2. Trustees' or governing board resolution formally authorising the accumulation, specifying the purpose and period
3. A brief project note or cost estimate (architect's estimate for construction, grant agreement for research) — not legally required but strongly advisable if the AO raises a query
4. Relevant extracts from the trust deed confirming the stated purpose aligns with the trust's objects

1. Verify using DSC and submit. Download and archive the acknowledgment immediately.

1. Share the Form 10 details with the statutory auditor before Form 10B or Form 10BB is signed, so the audit report cross-references the accumulation accurately.

Writing the Specific Purpose: What the Assessing Officer Looks For

The most litigated issue in Section 11(2) disputes is the adequacy of the specific-purpose statement. Courts and tribunals have denied accumulation benefits in cases where the stated purpose was indistinguishable from the trust's general objects.

Language that will not survive scrutiny:

• "Charitable purposes"
• "Objects of the trust as per trust deed"
• "Educational and social welfare activities"
• "Furtherance of the trust's mission"

Any statement that could justify any expenditure at any time gives the AO nothing concrete to verify and will be treated as a vague statement rather than a specific purpose.

Language that works:

• "Construction of a three-classroom primary school building at Survey No. 124, Village Bhandup, Taluka Andheri, Mumbai, estimated cost Rs. 20,00,000, to be completed by 31 March 2030"
• "Funding of multi-year ayurvedic research project on diabetes management in collaboration with XYZ Medical College, total outlay Rs. 30,00,000, project period April 2027 to March 2030"
• "Restoration of the 18th-century mandapam at [temple name] in accordance with the Archaeological Survey of India heritage plan, estimated cost Rs. 12,00,000"

The purpose must also connect directly to one of the objects enumerated in the trust deed. Accumulating income for a purpose outside the deed — even if that purpose is unambiguously charitable — risks being challenged under Sections 13(1)(c) and (d) as a diversion from the trust's objects.

Section 11(5): Permitted Investment Modes for Accumulated Funds

Filing Form 10 without then placing the accumulated funds in Section 11(5)-compliant investments is one of the most common and costly errors in trust compliance. The protection under Section 11(2) is conditional on the investment mode being compliant from the date of accumulation.

Permitted modes under Section 11(5):

• Government savings certificates and Central or State Government securities
• Post Office Savings Bank deposits
• Fixed deposits or savings accounts with scheduled banks (nationalised, private sector, and small finance banks appearing in the Second Schedule of the Reserve Bank of India Act, 1934)
• Units of the Unit Trust of India (UTI)
• Bonds or debentures of companies in which the public are substantially interested, subject to prescribed conditions
• Deposits with, or loans to, a public sector company
• Investment in immovable property (not acquired for resale within three years)
• Units of mutual funds referred to in Section 10(23D)
• Any other mode specified by CBDT notification

What is not permitted:

• Deposits with non-scheduled cooperative banks
• Loans to trustees, their relatives, or related parties
• Investment in unlisted equity shares, private equity, or alternative investment funds outside specified categories
• Real estate investment trusts or infrastructure investment trusts unless specifically notified
• Informal lending arrangements, post-dated cheques, or advances to related entities

If invested funds are moved out of a Section 11(5) mode during the accumulation period, Section 13(9) treats the entire accumulated amount as taxable income from the date of the change — not merely the portion moved. The safest and most straightforward approach is a fixed deposit with a scheduled bank or a Central Government security. Both are unambiguously compliant and generate documentary evidence that is easy to produce during assessment.

Worked Example: Trust ABC Accumulates Rs. 20 Lakhs for a School Building (FY 2026-27)

Background: Trust ABC is registered under Section 12AB (URN: AABCT1234Q12345). Its objects include the promotion of primary education in rural Maharashtra. In FY 2026-27 it receives:

The 85% application calculation:

• Required application: 85% × Rs. 80,00,000 = Rs. 68,00,000
• Actual expenditure during FY 2026-27:
• Merit scholarships disbursed: Rs. 25,00,000
• Running educational programs and teacher training: Rs. 18,00,000
• Allowable administrative expenses: Rs. 5,00,000
• Total applied: Rs. 48,00,000
• Shortfall: Rs. 68,00,000 − Rs. 48,00,000 = Rs. 20,00,000

The trust has received a contractor's estimate for a new three-classroom block at its rural campus. Total project cost: Rs. 20,00,000. Construction can begin only in FY 2027-28 and is expected to complete by FY 2029-30.

Compliance action: The board passes a resolution in March 2027 specifying the construction project, its location (Survey No. 456, Village Talasari, District Palghar), and the cost estimate. Form 10 is filed on 28 September 2027 — well before the 31 October 2027 deadline — stating:

> "Construction of three-classroom school building at Survey No. 456, Village Talasari, District Palghar, Maharashtra, at an estimated cost of Rs. 20,00,000, to be completed within three years from 1 April 2027, i.e., by 31 March 2030."

The Rs. 20,00,000 is placed in a fixed deposit with State Bank of India at 6.8% per annum — a fully compliant Section 11(5) mode.

Tax outcome with Form 10 correctly filed: Exempt income = Rs. 48,00,000 (applied) + Rs. 20,00,000 (accumulated under Section 11(2)) + Rs. 12,00,000 (15% permissible surplus) = Rs. 80,00,000. Tax payable: NIL.

Tax outcome if Form 10 is missed or filed after 31 October 2027:

• Rs. 20,00,000 is taxable as income of the trust
• Tax at 30% (maximum marginal rate for AOP): Rs. 6,00,000
• Health and Education Cess at 4%: Rs. 24,000
• Section 234B interest (1% per month from April 1, AY 2027-28, assuming no advance tax paid, return filed October 31): 7 months × 1% × Rs. 6,00,000 = Rs. 42,000
• Total cash outflow: approximately Rs. 6,66,000 — on income the trust genuinely intended for a classroom block for rural children.

Five-year tracking: The Rs. 20,00,000 must be fully expended on the school building by 31 March 2030 (the end of the three-year period stated in Form 10). Any unspent balance on that date becomes taxable in AY 2030-31 under Section 11(3). Year-by-year contractor payments, with invoices and site-progress photographs, constitute the application evidence required by the auditor.

Common Mistakes and How to Fix Them

1. Filing Form 10 after the Section 139(1) due date What goes wrong: The return-filing team files the ITR in late October and realises afterward that Form 10 was not submitted. By then, the deadline has passed and no rectification is possible for that year. How to fix it: Build Form 10 into the September pre-audit checklist — not the October return calendar. The form can be filed as soon as the board resolution is adopted, even before accounts are finalised.

2. Vague purpose statement What goes wrong: The trust types "charitable and educational activities" in the purpose field, the AO raises a query, and the Tribunal disallows the exemption for lack of specificity. How to fix it: Draft the purpose at the project level: name, location, estimated cost, reference to the trust deed object it serves. Have a legal or finance reviewer approve the language before submission.

3. Investing in non-compliant modes What goes wrong: The trust's treasurer places accumulated funds in a hybrid debt mutual fund that does not qualify as a Section 10(23D) fund, or in a cooperative bank that is not on the scheduled-bank list. How to fix it: Default to a scheduled-bank FD or Central Government security and get written confirmation from the bank that it is a scheduled bank. Keep the bank's RBI licence reference on file.

4. Not tracking the five-year deadline What goes wrong: Form 10 is filed in Year 1, the board changes, and no one tracks the expiry. In Year 6, the AO issues a notice under Section 11(3) demanding tax on the unspent balance. How to fix it: Maintain a formal accumulation register (see the format in the next section) and include it as an annexure in every annual audit. Alert the board six months before any accumulation deadline.

5. Confusing Form 10 with other Form 10-series filings The Income-tax Act and Rules are populated with forms bearing "10" in their name. These are all separate filings with entirely different purposes:

Filing Form 10A when you meant Form 10 triggers a fresh re-registration inquiry and wastes time. Always verify the form number against the section reference before submission.

6. Changing the purpose without filing afresh What goes wrong: The trust decides mid-period to repurpose the accumulated funds from a school building to a computer lab. No fresh Form 10 is filed and no board resolution documents the change. How to fix it: Any change of purpose within the accumulation period should be supported by a new trustees' resolution and a revised Form 10 (where feasible) or at a minimum a formal board minute that documents why the revised purpose is within the trust's objects and still compliant with Section 11(2). An undisclosed change is treated as a violation under Section 11(3).

Registration, URNs, and What the Auditor Verifies

Since the 2020-21 legislative overhaul under Finance Act 2020, every trust operates under a Unique Registration Number (URN) issued by CBDT upon registration under Section 12AB. Form 10 must carry the correct URN — a mismatch between the URN entered on the filing and the AO's registration records causes the portal to reject the submission automatically.

Trusts that allowed their Section 12A registrations to lapse or missed the transitional re-registration window must obtain fresh registration via Form 10A (provisional, three-year validity for new trusts) or renew via Form 10AB (regular renewal, five-year validity, to be filed at least six months before the current registration expires) before they can file a valid Form 10. A trust operating without a live Section 12AB registration has no access to Section 11(2) accumulation — the two are inseparable.

On the audit side, Form 10B (mandatory for trusts with gross receipts exceeding Rs. 5 crore in the financial year, or those receiving foreign contributions, or those claiming exemption under Section 10(23C)(iv)/(v)/(vi)/(via)) contains a dedicated schedule that requires the signing Chartered Accountant to:

• Confirm whether Form 10 has been filed for each accumulation claimed under Section 11(2)
• Verify that the accumulated amounts are invested in Section 11(5)-compliant modes and identify the specific instruments
• Report the exact purpose and period stated in Form 10 and whether the accumulation appears genuinely aligned with the trust's objects
• Flag any accumulation year where the five-year clock is within twelve months of expiry and whether the funds are being applied as planned

A qualified or adverse comment in Form 10B on the accumulation is a serious red flag. It can prompt the AO to issue a show-cause notice under Section 12AB(4) for modification or cancellation of registration, and separately to frame an assessment disallowing the accumulated income. The audit report and Form 10 are not independent compliance events — the AO reads them as one narrative.

The Five-Year Clock: Tracking Accumulated Funds to Completion

Section 11(3) is the enforcement mechanism that makes the five-year limit real. It deems any amount accumulated under Section 11(2) but not applied to the specified purpose within the specified period to be the income of the trust in the year immediately following the expiry of the accumulation period. The tax demand in that later year can come as a surprise if the trust has not maintained a running record.

A practical accumulation tracking register (maintain annually, share with auditor):

Update this register at each board meeting. For construction projects, the application evidence consists of contractor invoices, site inspection notes, and payment transfer records. For research programmes, it is grant disbursement records and project milestone reports. A trust that can produce year-by-year documentation closes AO queries at the notice stage rather than in appellate proceedings.

If you realise midway through the accumulation period that the project cannot be completed within the stated time frame, the prudent course is to apply the accumulated funds to a closely related charitable purpose within the remaining period, document the decision formally at board level, and inform the auditor before Form 10B is signed. There is no express statutory provision for extending an accumulation period beyond the original Form 10 declaration — any such extension is a grey area requiring legal opinion and proactive communication with the AO.

Do not rely on a bank FD auto-renewing as a substitute for project application. The FD will roll over automatically; the tax liability will not.

Key Takeaways

• Form 10 is a pre-condition, not a correction. It must be on record before 31 October of the Assessment Year (for audit-mandated trusts in AY 2027-28); a post-deadline filing provides no Section 11(2) protection whatsoever.
• "Specific purpose" means project-level precision — name, location, estimated cost, connection to the trust deed. Statements that merely restate the trust's objects have been struck down repeatedly by tribunals and give the AO a valid ground to deny the exemption.
• Section 11(5) investment compliance is continuous throughout the accumulation period, not just at the date Form 10 is filed. A mid-period switch to a non-permitted mode triggers Section 13(9) from the date of the change.
• The rupee cost of a missed deadline is quantifiable: on a Rs. 20-lakh accumulation, missing the 31 October deadline costs the trust approximately Rs. 6.66 lakhs in tax, cess, and interest in AY 2027-28 alone — on income that was genuinely earmarked for charitable infrastructure.
• Form 9A and Form 10 serve different purposes and cannot substitute for each other: Form 9A defers application of unrecovered income to the next year; Form 10 ring-fences a committed sum for a defined project over up to five years.
• URN accuracy on the portal is non-negotiable: a URN mismatch causes immediate rejection of the Form 10 submission. Verify the URN in the CBDT registration portal before drafting the form, especially if the trust recently renewed or modified its registration.
• Maintain a formal five-year accumulation register, update it at every board meeting, and provide a running copy to the statutory auditor so that Form 10B accurately reflects application progress each year — and so the trust is never blindsided by a Section 11(3) demand in a later Assessment Year.