Introduction
The inception of Rule 17AA, introduced through the Finance Act of 2022 and effective from the assessment year 2022-23, established pivotal guidelines for the preservation of financial records and documents pertinent to trusts and institutions.
Key Provisions as Stipulated by Rule 17AA
Mandatory Financial Records and Documents
Pursuant to Section 12A(1)(b) of the Income Tax Act, any trust or institution whose gross income exceeds the threshold of non-taxable limits is required to maintain a prescribed set of financial records.
Compliance Directives
Auditing of Financial Statements
As a fundamental compliance requirement, such entities must subject their accounts to an audit conducted by a qualified accountant before the deadline specified in Section 44AB.
Additional Prerequisites for Tax Exemptions
To secure exemption privileges under Sections 11 and 12, charitable organizations must not only maintain comprehensive financial records but also fulfill supplementary obligations.
Document Format and Preservation
Permissible Formats for Record Maintenance
Rule 17AA accommodates the storage of financial records in various formats.
Extensive Record-Keeping Specifications
Charitable organizations must maintain exhaustive records across several categories, such as income, property, loans, and more.
Securing Compliance
Adherence to the meticulous documentation and record-keeping standards prescribed by Rule 17AA is essential for trusts and institutions.