Many people in industry have confusion regarding exemption in case of corpus donation by exempt entities to other exempt entities. It is very small and simple concept but time to time changes made by government in the related sections makes it little complicated to understand. Today I will cover this through my article.

There are only two points which need to be keep in mind so that the concept related to corpus donation will be cleared. Two concern points are as under:

  1. Any contribution by a charitable or religious trust to any other trust registered under Section 12AA, with a specific direction that it shall form part of the corpus of recipient trust is not considered as an application of income for the donor trust.
  2. The above provision is missing in Section 10(23C), Hence Finance Act, 2020 has made an amendment in Section 10(23C). So now, the corpus donations shall not form part of the income of such institutions. It has been provided that any corpus donations received by such fund or institution or any university or other educational institution or any hospital or other medical institution, shall not be included in the income of such entities. This amendment will definitely help all institution or any university or other educational institution or any hospital or other medical institution, since it will give them relaxation from the requirement of mandatory application of income in respect of corpus donations.

At the end to summarised, any contribution by a charitable or religious trust to any other trust registered under Section 12AA or Section 10(23C) with a specific direction that it shall form part of the corpus of recipient trust is not considered as an application of income for the donor trust.

(Republished with Amendments by Team Taxguru)

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