Exemptions to Charitable Trust under Income Tax Act, 1961

Income of a charitable and religious trust is exempt from tax subject to certain conditions. The exemptions are provided to the trusts under various provisions, inter-alia, Section 10, Section 11, etc. Some of the exemptions allowed to a trust are as under:

Section 11 provides exemption for Income derived from property held under trust wholly for charitable or religious purposes to the extent such income is applied for charitable or religious purpose in India to the extent to which the income so accumulated or set apart is not in excess of fifteen percent of the income from such property.

Section 12 provides Income in the form of voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes.

Section 10(23C) provides that the income earned by any university or educational institution existing solely for educational purposes and not for the purposes of profit shall be exempt from tax if the aggregate annual receipts of such university or educational institution do not exceed Rs. 5 crores.

Registration of Charitable Trust under Income Tax Act, 1961

It is mandatory for a trust to get the registration under section 12AB so as to claim exemption under Section 11.

A trust is required to apply for registration in Form 10A.

Return Filing applicable to Charitable Trust under Income Tax Act, 1961

A trust is chargeable to tax as per the slab rates which are applicable to an individual.Return Filing

It is mandatory for a trust referred to in Section 139(4A)139(4C),139(4D) and 139(4E) to file the return of income.

Further, a trust not covered in above is required to file return of income if its gross total income exceeds the maximum amount which is not chargeable to tax.

Companies registered under Section 8 ie. Non-Profit organization and Trust which have been enrolled under 12A are needed to file ITR 7.

The companies excluded from above context are required to file ITR 5.

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Anubhav has over 5 years of professional experience in handling Audit & Assurance of various entities, Direct & Indirect Tax Advisory services, Project financing, Litigation Services, RERA, Preparation and Finalization of Income Tax returns, Monthly Compliance which includes GST, TDS and oth View Full Profile

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September 2021