Trust articles

Cash Transaction Restrictions on Charitable Trusts under Income Tax

A charitable or religious institution has substantial source of receipts in form of donations. Such donations may be corpus or voluntary. The Income Tax Law provides blanket exemption to corpus contributions (received for a particular purpose such as for construction of a building) whereas it requires application of voluntary contribution...

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Posted Under: Income Tax |

Income Tax Assessment of Private Trusts (Section 161 to 164)

Trusts have not been defined under the Income-tax Act 1961. The Dictionary meaning of ‘Trust’, in so far as it relates to the realm of law,  is ‘an arrangement’ by which property is handed over to or vested in a person, to use and dispose it off for the benefit of another person.’ Trust can […]...

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Posted Under: Income Tax |

Income Tax Exemptions versus deductions

A provision does not become an exemption provision merely because the marginal notes to the section or the heading of the section call it so.Tax law contains chapters dealing with incomes which do not form part of total income. There are chapters dealing with deductions and allowances. Chapter III refers to various incomes which are exemp...

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Posted Under: Income Tax |

No registration required for trust carrying out ‘charitable activities’ exempt under GST

The Hon’ble AAR, Gujarat in Re: All India Disaster Mitigation Institute [Advance Ruling No. GUJ/GAAR/R/20/2019 dated September 11, 2019] wherein the charitable trust registered under Section 12AA and 80G of Income-tax Act, 1961 (Income Tax Act) carrying out charitable activities for preservation of environment, held that since the activ...

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Posted Under: Income Tax |

Received Gift – Whether it is Taxable or Not?

Under the provisions of Section 56(2)(vi) certain gifts are liable to income tax as income from other sources. However, this provision is applicable only for individuals and Hindu Undivided Families (HUFs). Thus, if gift is received by any Trust or A.O.P., then it is not liable to income tax as "income from other sources". The provision o...

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Posted Under: Income Tax |

Trusts, CPC & Form of Return of Income: “Form” Over Substance?

Many trusts are facing issues for not filing the return of income in correct form No.7. This may be due to the fact that trusts do not have qualified staff with them or that at small places proper tax consultants are not available. May that be so. But, such returns are processed by CPC treating […]...

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Posted Under: Income Tax |

No exemption on corpus donation by exempt entity to other exempt entity

As per the existing provisions of the Act, donations made by a trust to any other trust or institution registered under section 1 2AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or ...

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Posted Under: Income Tax |

Concept of NGO and Income Tax Provisions

Trust, Society and Section 8 Company can seek registration u/s 12A to claim exemption under provisions of Income Tax Act’1961, if certain conditions are satisfied. Section 12A deals with registration of trust and section 12AA deals with procedure for registration of trust....

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Posted Under: Income Tax |

Registration of NGO as trust

A trust can be either private or public. Private trusts are governed by the Indian Trusts Act, 1882 and are used for private purposes, such as running a private estate or institution. For doing a charitable work for public, Public charitable trusts can be set up. India doesn’t have a national level law to govern charitable trusts, [&h...

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Posted Under: Income Tax |

Section 12A registration despite non-commencement of charitable activity

In this Covid 19 pandemic times, many NGO have been come forward to help the society. They are providing assistance in medical, relief to the poor, food, education, home shelter etc. They are foundation for this critical time. Many kind hearted people also come forward to donate to NGO so that the NGO can function […]...

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Posted Under: Income Tax |

Common errors in taxation of charitable & religious organization

Very often we get involve in rendering of professional services to charitable and religious organization commonly called as NGO, NPO etc. These services include Auditing, Accounting, Taxation, consultancy, foreign transaction related issues etc. In this regard as far as taxation services are concerned some common errors frequently happen ...

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Posted Under: Income Tax |

Trust Registration under section 10(23C), 12A, 12AA, 12AB, 80G

Key Notes on Direct Taxation (Income Tax) For UNION BUDGET 2020 FOR APPLICATION AND VALIDITY OF REGISTRATION FOR TRUST/INSTITUTION U/S 10(23C), SECTION 12A, 12AA, 12AB, 80G of the Income Tax Act, 1961. The process of approval and registration of trusts, institutions, funds, university, hospital etc. proposed to be rationalised with effect...

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Posted Under: Income Tax |

Trust- Definition, Registration, Taxability, Exemption & Return Filling

Introduction:- Trust formed for charitable or religious purposes which are not intended to do commercial activities are allowed various benefits under the Income-Tax Act, inter-alia, and exemption under section 11. Section 2(15)​ of the Income Tax Act defines “charitable purpose” to include relief of the poor, education, medical...

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Posted Under: Income Tax |

Step by Step Procedure of Trust Formation

Step by Step Procedure on Trust Formation Every person in this world will earn money by doing business. That means they are selling Services/Goods by fixing a price. Simply, they are expecting something. But the same person will do some deeds without expecting anything. That is Selfless Service. The Person can lawfully do the same [&helli...

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Posted Under: Income Tax |

Concept of Business Trust in India

Many of us got so confused after hearing the name of ‘Business Trust’. There are so many doubts in the mind of people relating to this concept. Hence today I am come up with this most demanded topic of Business Trust....

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Posted Under: Income Tax |

Taxation of Business Trust in India

In this article I am going to discuss Taxation of Business Trust in India. Concept of Business Trust was introduced vide Finance Act, 2014. The Finance Act, 2014 has put in place special taxation regime in respect of Business Trust....

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Posted Under: Income Tax |

Application for Exemption U/S. 10(23C)(VI) – Detailed Discussion

As we all know that earlier application for granting exemption u/s 10(23C)(vi) is applied in Form 56D, which is now omitted w.e.f. 05 November, 2019. Notification No. 60/2019–Income Tax- CBDT amends rules 2C and 2CA related to Application for the purpose of grant of approval for the exemption under sub-clause (iv), sub-clause (v), s...

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Posted Under: Income Tax |

Modes of investment or deposits | Section 11(5) | Income Tax Act

Modes of investment or deposits by a Charitable or Religious Trust or Institution as per provisions of Section 11(5) of the Income Tax Act, 1961 Surplus fund of the Charitable entities should be invested as per forms and modes prescribed under section 11(5) of Income Tax Act. Investment in shares by a charitable Trust As […]...

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Posted Under: Income Tax |

Indian Trust -Sec-2(15) –Is it really a boon for Public Charitable Trusts?

The Charitable institutions play important supplementary role, apart from Govt of India/States social welfare depts., in uplifting the poor from poor economic conditions to and try to shield them from starvation. ...

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Posted Under: Income Tax |

Assessments of Charitable Trusts- Excess Application of Income

The assessment of charitable trusts until Finance Act 2008, was an easy task, with most of the litigative issues being settled. However, due to the amendment carried out in the term 'charitable purpose' under Sec 2(15) in the said Act, the Department started out with a vengeance, in cancelling registrations and rejecting applications for ...

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Posted Under: Income Tax |

Taxation of Charitable/Religious Trust

Shalki Bansal Charitable/religious trusts are the trusts which are formed with an objective of providing relief to poor, education, medical relief, preservation of environment/ monuments , advancement of objects of general public utility, religious purpose, etc. There taxation has always been a point of concern. The entire income of such ...

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Posted Under: Income Tax |

Income Tax provisions relating to Private Trust (Family Trust)

The Indian Trust Act, 1882, governs a Private Trust. Private trust is a vehicle through which property can be transferred from one person (owner) to another for the benefit of an individual or an ascertainable group of people. A private trust is created for the benefit of specific individuals i.e., individuals who are defined and [&hellip...

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Posted Under: Income Tax |

Taxation of voluntary Contributions received by Trusts/ Charitable Institutions

Trusts and other charitable institutions generally receive money from Voluntary Contributions from members and from the general public, let us look at the taxation aspects of these voluntary contributions....

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Posted Under: Income Tax |

How to Raise Funds For NGO

Dear readers, as you all know activities related to Social Welfare are part of our Society. Some peoples from society take this initiative to do Social welfare activities to help needy peoples. In the Current situation of COVID -19, the whole economy is in lockdown and the NGO of India has taken the responsibility along […]...

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Posted Under: Income Tax |

Income Tax Provisions relating to Religious Trusts

The Income Tax Act makes a distinction between Trusts for charitable purposes and those for religious purposes, though both are entitled to exemption under section 11 of the Act. The creation of religious charitable trusts is governed by the personal laws of the religion. The administration of these religious trusts can either be left to ...

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Posted Under: Income Tax |

Additional Income Tax compliance burden for Charitable/Religious Trusts

A New Era of Taxation of Charitable/Religious Trusts-Facing the challenges ahead amid a Paradigm Shift in the Regulatory Scheme clothed with some additional compliance burden for the Financial Year 2020-21 This year the Taxman has come with a substantial overhaul having regard to the taxation of the Trusts, Societies, NGOs etc. i.e. Char...

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Posted Under: Income Tax |

Tax on Capital gain on sale of Assets by Charitable Trust/NGO

The definition of income under section 2(24) includes Capital Gains and therefore for the purposes of section 11, Capital Gains should form part of the income and consequently it should be treated at par with any other income under section 11....

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Posted Under: Income Tax | ,

Exit tax where charitable institution converts into non-charitable

In order to ensure that the intended purpose of exemption availed by trust or institution is achieved, a specific provision in the Act is required for imposing a levy in the nature of an exit tax which is attracted when the organization is converted into a non-charitable organization or gets merged with a non-charitable organization or do...

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Posted Under: Income Tax |

5 FAQs on registration of trust in Karnataka

Q.1 How to form a Trust’?  Ans: a) A trust can be formed as per Section 4 of Indian Trust Act 1982 for a lawful purpose; b) A trust should have a document written (Trust Deed) and signed by trustees or a sole trustee; c) A trust can be formed through a will also; There […]...

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Posted Under: Income Tax |

Procedure of Trust Registration in Punjab

What is Trust As per the Indian Trust Act 1882, a Trust is an arrangement where the author/ owner (trustor) transfers the property to someone else (trustee) for the benefit of a third person (beneficiary). Such a property is transferred by the author/ trustor to the trustee along with a proclamation that the trustee should […]...

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Posted Under: Income Tax |

Analysis of Budget 2020: Impact on Charity Institution

For development sector, on the one-hand, the budget has covered various loopholes but on the other side, it has burdened the non-profit sector with renewal formalities, donation reconciliation requirements and other registration formalities....

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Posted Under: Income Tax |

Re-obtaining Section 12AA Registration| Approval U/s. 10(23C) & 80G

Budget 2020: Re-obtaining Of Registration under Section 12AA & Approval under Section 10(23C) & Section 80G by Existing Registered / Approved Entities – Concerns and Issues Introduction: The income of the charitable / religious trusts, institutions, universities, educational institutions, hospitals, other medical institutions et...

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Posted Under: Income Tax |

Major Income Tax Proposals for Charitable Trusts & Institutions: Budget 2020

The process of approval and registration of trusts, institutions, funds, university, hospital etc. proposed to be rationalised with effect from 1.6.2020. Now, the approval or registration or notification for exemption will be valid for a period not exceeding five years at one time;...

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Posted Under: Income Tax |

Budget 2020 provisions related to Charitable trust, institution and funds

Amendment of sub-section (7) of section 11 to allow entities holding registration under section 12A/12AA to apply for notification under clause (46) of section 10 Section 11 of the Act provides for grant of exemption in respect of income derived from property held under trust for charitable or religious purposes to the extent to which [&h...

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Posted Under: Income Tax |

Budget 2020 | Exemption U/s. 11 & 10(23C) | Approval U/s. 80G

Budget 2020: Exemption Under Section 11 AND Section 10(23C) And Approval Under Section 80G For Charitable / Religious Etc. Trusts, Institutions Etc. – An Analysis Of Proposed Amendments Introduction: The Finance Bill, 2020 has proposed to make substantial changes regarding provisions for granting exemptions to the charitable / religious...

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Posted Under: Income Tax |

Transfer of Property Through Trust

A trust is an arrangement by which the property of the author of the trust or settlor is transferred to another, the trustee, for the benefit of a third person, the beneficiary. In general terms, trusts fall into one of two categories, private trusts and public trusts. The India Trusts Act, 1882 (act) governs private […]...

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Posted Under: Income Tax |

5 Important points related to Charitable / religious trusts

Finance Act’2017 had made some major changes relating to Charitable and religious trusts. In this Article we have discussed five major amendments which are affecting Charitable and religious trusts....

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Posted Under: Income Tax |

Key Points for Registration of Trust / Society u/s 12AA of IT Act, 1961

The following points have to be observed in connection with Registration of Eligible Entity under Section 12AA of the Income Tax Act, 1961: (01) The due reasonable opportunity of being heard properly has to be provided to the applicant as per Subsection (1) of Section 12AA of the Income Tax Act, 1961. ...

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Posted Under: Income Tax |

Registration of Charitable or Religious Trusts

As we all are aware that, Rule 17A i.e Application Forms and rules for registration of charitable or religious trusts has been completely amended by Income-tax (First Amendment) Rules, 2018, w.e.f. 19-2-2018. Therefore the said amendments in brief are as under: Provisions  before amendment New Provisions Application for registration of c...

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Posted Under: Income Tax |

Benefits of Registration u/s 12A of Income Tax Act, 1961

Section 2(15) defines Charitable Purpose and sections 11, 12, 12A, 12AA and 13 of the Income –tax Act, are the main sections that deal with scheme of taxation exemption in respect of income of charitable or religious trusts/institution....

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Posted Under: Income Tax |

Analysis of Provisions related to tax on Accreted Income of Certain Trusts and Institutions

There was no provision in the Income-tax Act which ensured that the corpus and asset base of the trust accreted over period of time, with promise of it being used for charitable purpose, continues to be utilized for charitable purposes and is not used for any other purpose....

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Posted Under: Income Tax |

Rules to apply for registration of charitable or religious trusts

As we all are aware that the existing Form No. 10A has been substituted vide CBDT Notification No.10/2018 dated 19/02/2018. Also, rule 17A has been substituted by the Income-tax (First Amendment) Rules, 2018, w.e.f. 19-2-2018. This article will contain the details regarding Form 10A, documents require for registration, e-filing of Form 1...

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Posted Under: Income Tax |

Tata’s Six Charitable Trusts’ Registration: Cancellation or Voluntary Surrender?

The recent cancellation of the Tata’s Six Charitable Trusts’ Registration by the Office of the PCIT Mumbai on October 31, 2019 is one such disruption, which has definitely caused tremors and vibrations in the tax circles, and has caught the attention and limelight in all the national dailies and print media....

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Posted Under: Income Tax |

Types of trust and its taxation

Types of trust and their tax treatments The plethora of litigation, complex, dynamic and ever changing tax provisions are best way to define trust though law maker also attempted to defined trust as “A trust is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by […]...

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Posted Under: Income Tax |

How to establish Charitable Company/NGO in India through Foreign Funding

1. CONCEPT OF CHARITABLE COMPANY/NGO’S: Charitable Company or Non Governmental Organization (NGO) is a group, organization, Non Profit establishment or non Profit association of individuals, activists, voluntary and social persons. Non Government Organization (NGO) is citizen based non–profit group works for social welfare and sustain...

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Posted Under: Income Tax |

Private Trust In India

1. Meaning of different terms under Income Tax Act, 1961:- i. Trust : A trust is an obligation in relation to ownership of property & which is arising out of confidence reposed in and accepted by owner or declared and accepted by him, for the benefit of another, or of another and the owner. ii. […]...

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Posted Under: Income Tax |

How to register Public Trust In India

1. Trust Registration Overview: ♦ Public trust is most convenient way of starting a non-governmental organisation (NGO). ♦ Main objectives of trust are eradicating poverty, offering medical support, and promoting art, science and literature. ♦ Trusts are irrevocable i.e. they cannot be terminated without permission of court. 2. Trus...

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Posted Under: Income Tax |

Private Trust

Private Trust A ‘trust’ is an obligation: annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner There are public & private trusts. Private Trust Private trust is a […]...

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Posted Under: Income Tax |

Additional Reporting by Auditors of Charitable Trusts under Maharashtra Public Trusts Act, 1950

Govt. introduces Additional Reporting by Auditors of Charitable Trusts under the Maharashtra Public Trusts Act, 1950 to check Income Tax Compliances/Evasion. The Law and Judiciary Department, Maharashtra State, vide Notification Dated 15/05/2019, has framed the Bombay Public Trusts (Second Amendment) Rules, 2019, to introduce additional r...

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Posted Under: Income Tax |

Charitable Trusts: Income Tax Perspective

ARE INCOME TAX AUTHORITIES REALLY CHARITABLE WHEN IT COMES TO CHARITABLE TRUSTS? CHARITABLE TRUSTS: INCOME TAX PERSPECTIVE ‘Charity begins at home but should not end there.’ –Francis Bacon  The essence of the above quote has been fully captured in the definition of the expression “charitable purpose” as envisaged in the...

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Posted Under: Income Tax |

Formation of NGO in India

Charity means giving something to those in needs without expectation or wanting something back in return. It is doing something good to others without expectations. Charity is a selfless act. There are a lot of ways of doing charity. The people who are keen to do good for others need not necessarily have a good […]...

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Posted Under: Income Tax |

Taxation of Charitable and Religious Trusts

The trust is an obligation annexed to ownership and arising out of confidence reposed in and accepted by the owner for the benefit of another. The person who reposes the confidence is called the ‘author of the trust’; the person who accepts the confidence is called the ‘trustee’ and the person who is benefited is [...

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Posted Under: Income Tax |

Charitable/Religious Trusts & Institutions – Simplified

Article discusses the concept of Charitable/Religious Trusts and various tax benefits which the govt. has provided them. 1. What is Charitable/Religious Trust? 2. How Charitable/Religious Trust being created?...

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Posted Under: Income Tax |

Charitable Purpose u/s. 2(15) of Income Tax Act ,1961

Courts have held that the expression ‘charitable purpose’ is sufficiently wide in scope to include a variety of activities. For instance, promotion of sports and games is a charitable purpose...

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FAQs Related to Income Tax Provisions of charitable trust and NGOs

FREQUENTLY ASKED QUESTIONS (FAQs) Q.1 Are NGOs and other charitable and non-profit organizations entitled to claim tax exemption under income tax law in India? Are donors who contribute to such organizations also entitled to any tax deduction? Ans. Yes, such exemption is available to, (i) public charitable trusts or other legal obligatio...

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Posted Under: Income Tax |

Taxation of Private Trusts & Applicable Tax Rates

a. The shares falling to each of the beneficiaries are liable to be assessed, either in the hands of the trustee(s) as a representative assessee or directly in the hands of the beneficiary entitled to the income. Such assessment is made at the rate applicable to the total income of each beneficiary....

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Posted Under: Income Tax |

What’s better- Trust, Society or section 8 Company?

One can set up either a public charitable trust, a registered society, or a Section 8 Company (a trust corporation). Each has its own advantages and constraints. If a person wishes to set apart either property or money for a charitable purpose so that the income may be devoted in perpetuity for the fulfilment of the charitable activity,...

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Posted Under: Income Tax |

Taxation of Income of Unit Holders of Business Trust

The ‘Concept of Business Trust in India’ was introduced vide the Finance Act’2014. The business trusts operate as Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). At present, there are only InvITs registered in India, the first REIT is yet to pave its way. Practically the concept was implemented i...

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Posted Under: Income Tax |

Taxation Aspects of Charitable Trusts

Charitable Trust is meant for public service and not for profit. Hence the Honorable Government has given exemptions in the form section 11 and 12. It will bring lot of tax benefits to the trusts and it can utilize the funds for its objectives. From the assessment year 2018-19 onwards, filing of return is to be done within the due date to...

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Posted Under: Income Tax |

Guidelines issued by CPC for claiming Exemption u/s 10 & 11

As per the provisions of Income Tax Act, the exemption of income under sections 10 and 11 is governed by certain statutory conditions and procedures. In order to assist you in complying with these conditions and procedures, your attention is drawn to the following with a request to keep them in mind while filing Income tax return in ITR-7...

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Not All Sale of Goods by NGOs are subject to GST

CBEC has come out with an excellent flyer on the subject GST on Charitable and Religious Trusts clearly enunciating the provisions of the GST Act and exemption notifications and highlighting the fact that NOT all services provided by such entities are exempt from GST. The last para of the Flyer is given below....

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Trusts in India: Still Remain Unexplored

Trust is defined in section 3 of the Indian Trust Act, 1882 as an obligation annexed to the ownership of property and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another or of another and the owner. Simply said, it is a transfer of property by one person (settlor) t...

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Posted Under: Income Tax |

Annual income below Rs. 5000: Guidelines for Online Submission of Trust’s Accounts

Now we will understand the procedure for online submission of Trust's Accounts whose annual income is below Rs.5000/-...

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Posted Under: Income Tax |

Guidelines for Online Submission of A/cs of Trusts whose annual income is above Rs. 5000

Now we will understand the procedure for online submission of Trust's Accounts whose annual income is Above Rs. 5000/-...

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Posted Under: Income Tax |

Procedure for online registration of Trust in Maharashtra

In this article we will understand the procedure for online registration of Trust under Maharashtra Public Trusts Act, 1950 on charity organization website www.charity.maharashtra.gov.in....

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Posted Under: Income Tax |

Guidelines for Online Entries in Schedule I by Charitable Trusts

Now we will understand the procedure for making online entries in Schedule I on the website of Maharashtra Charity Organization website namely www.charity.maharashtra.gov.in....

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Posted Under: Income Tax |

Procedure for online submission of application U/s. 41C on Charity Organization website

While submitting the application for Event 41 C, your Mandal's name shall not be identical with the name of any Country or any State or resembled with any body constituted by the Government or any local authority or which is prohibited under Emblems and Names (Prevention of Improper Use) Act, 1950...

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Posted Under: Income Tax |

Procedure for Online Registration of Society in Maharashtra

Now we will understand the procedure for online registration of Society under the Society Registration Act, 1860 on charity organization website charity.maharashtra.gov.in....

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Aerial View Of “Regulatory Compliances Expected From Public Charitable Trusts”

Large number of Trustees of Charitable Trusts who are engrossed in philanthropic work are unwary to compliances imposed by relevant statutes. Enlisted below are few such points which could enable stakeholders to understand applicable statute and ensure its compliance: ...

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Posted Under: Income Tax |

Charitable Trusts De-Registration (Cancellation) drive in Maharashtra

The Hon’ble Charity Commissioner, Maharashtra State, Mumbai vide Notification dated DGIPR/2016-2017/4109 had notified the Special Drive, 2017 Scheme for speedy disposal of all the Change Reports (Change in Trustees / Properties) during the period 01/01/2017 – 31/01/2017. Mode details about the same can be read here:...

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Posted Under: Income Tax |

SC judgment interpreting consumer protection Act excluding a trust

A Public Trust engaged in a good cause are made to suffer for the deficiencies and malpractices of the service providers by such narrow interpretation. It is not an equitable and just interpretation...

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Posted Under: Income Tax |

Beneficial Interest and the concept of property

Through this article, we try and understand a very interesting question of whether beneficial interest can be considered a property. To get a better insight, we first need to understand the concept of beneficial interest in law and what amounts to property....

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Posted Under: Income Tax |

Proposed Important Amendments for Charitable Trust by Finance Bill 2017

While presenting budget 2017, there were several amendments proposed by Finance Minister Mr. Arun Jaitley with respect to Taxation of Charitable Trust...

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Charity Commissioner, Maharashtra State Special Drive 2017

Charity Commissioner, Maharashtra State Special Drive 2017- For Filing of Audited Accounts and Change Reports under Bombay Public Trusts Act, 1950...

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Recent case laws applicable to NGOs / Charitable Trusts

[2015] 55 taxmann.com 255 (SC) SUPREME COURT OF INDIA Queen’s Educational Society v. Commissioner of Income-tax *In favour of assessee Where a surplus was made by educational institution which was ploughed back for educational purposes, said institution was to be held to be existed solely for educational purpose and not for purpose ...

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Denial of exemption U/s. 11 to the total income of a trust, in view of violation of section 13(1)(c) / 13(1)(d), is not legally tenable

Section 11 of the Income-Tax Act, 1961 (the Act) excludes from the income of charitable or religious trusts, income to the extent it is applied towards the objects of such trusts, during the previous year in India. It may be stated here that there are several conditions laid down under section 11 of the Act, for the purpose of claiming ex...

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Educational and Medical Institutions – Heed the wake-up call!

The Finance (No.2) Act 1998 has made far-reaching changes in the provisions of Income-Tax Act 1961 relating to the taxation of educational and medical institutions. The reasons for the same, as stated in the Finance (No.2) Bill 1998, are as follows:...

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Income Tax : Trust Registration and Tax Rate

Trust formed for charitable or religious purposes which are not intended to do commercial activities are allowed various benefits under the Income-Tax Act, inter-alia, exemption under section 11. The term religious purpose is not defined under the Income-Tax Act. However, Section 2(15) of the Act defines charitable purpose to include reli...

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Taxation Regime for Real Estate Investment Trusts and Infrastructure Investment Trusts

The Finance (No.2) Act, 2014 had amended the Income-tax Act to put in place a special taxation regime in respect of business trusts. The business trust as defined in section 2(13A) of the Income-tax Act before amendment by the Act, included a Real Estate investment Trust (REIT) and an Infrastructure Investment Trust(InviT) which is regist...

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Assessment of Charitable Trusts and Institutions – A Ready Referencer

Many Non Governmental Organizations spread across the world are supplementing the efforts of the governments in promoting social welfare and economic development. Tax administrations have also recognized the voluntary efforts of these NGOs and provided tax incentives to those engaged in charitable activities. The present booklet under ‘...

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Permission u/s 11(1)(c) for rendering help to victims of Nepal Earthquake

The Central Board of Direct Taxes has decided to fast track all applications made u/s 11(1)(c) of the Income Tax Act, 1961 seeking approval for rendering help to the victims of earthquake in Nepal. It will be the endeavor of the Department to process these applications within two working days of receiving the completed applications....

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Short guide on Legal issues involved with NGOs in India

NGO’s or charity work in India can be carried out by various methods/forms of business, such as a Trust/ A society or by a Non-Profit Company. Coming to the point of why the Government cancelled these licenses. What I have gathered is because:...

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Posted Under: Income Tax |

A guide to formalising the charity work you are intending to do in India

Forming a, Trust or a Society, or a Company Generally speaking, any organisation that devotes its funds for public welfare is a not-for-profit organisation (NPO). This includes schools, colleges, hospitals, religious organisations, etc. It also includes non-governmental organisations (NGOs). There are three common forms of not-for-profit ...

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Posted Under: Income Tax |

3 Important Income Tax Case laws on Charitable or Religious Trusts and Institutions

1. Whether the Tribunal was right in negating the assessee’s claim for accumulation of unspent income? 2. Whether repayment of borrowed funds utilised for construction of commercial complex augmenting income of trust and amounts to application of income for charitable purpose eligible for exemption under section 11? ...

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Budget 2015 defines Business Trust & includes Yoga in charitable activities

Rationalisation of definition of charitable purpose in the Income-tax Act The primary condition for grant of exemption to a trust or institution under section 11 of the Act is that the income derived from property held under trust should be applied for charitable purposes in India. ‘Charitable purpose’ is defined in section 2(15) of t...

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Posted Under: Income Tax |

Budget 2014- Taxability of Anonymous donations under section 115BBC

Anonymous donations under section 115BBC The existing provisions of section 115BBC of the Act provide for levy of tax at the rate of 30 per cent. in case of certain assessees, being university, hospital, charitable organisation, etc. on the amount of aggregate anonymous donations exceeding five per cent of the total donations received by ...

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Posted Under: Income Tax |

Trusts to give notice for accumulation of Income (From 10) electronically from A.Y. 2014-15

CA Sandeep Kanoi CBDT has vide notification NOTIFICATION NO. 24/2014, Dated: April 1, 2014 amended the rule 12 of Income Tax Rules, 1962 and provided that notice under clause (a) of sub-section (2) of section 11 of the Act, shall be furnished  electronically in form No. 10 w.e.f. Assessment year 2014-15 before expiry of time […]...

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No Exemption to charitable organization in case commercial receipts exceed the specified threshold

In case where the activity of any trust or institution is of the nature of advancement of any other object of general public utility, and it involves carrying on of any activity in the nature of trade, commerce or business; but the aggregate value of receipts from the commercial activities does not exceed Rs. 25,00,000/- in the previous y...

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Budget 2011-12 – Exemption of specified income of notified body or authority or trust or board or commission

It is proposed to insert a new clause in section 10 of the Income-tax Act to provide exemption from income-tax to any specified income of a body, authority, board, trust or commission which is set up or constituted by a Central, State or Provincial Act or constituted by the Central Government or a State Government with the object of regul...

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Posted Under: Income Tax |

Cash Credit & Addition under Section 68 of Income Tax Act

If there is cash credit, creditworthiness of the creditor, genuineness of the entry, identity of the creditor, the source of money, etc. is required to be considered under section 68 of Income-tax Act....

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Posted Under: Income Tax |

Amendment In Definition Of `Charitable Purpose'

A number of trusts, societies and other organization avail exemption under Section 11 or Section 10(23C) by virtue of having income derived from property held under trust wholly for charitable or religious purposes, to the extent of the application of such income. Background of amendment Section 2(15) of the Act defines the term ‘Ch...

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Taxability Of Income From Trusts Under Section 166 of the Income Tax Act, 1961

H.H. Maharaja v. ACIT - September 12, 2008 - Section 166 can be invoked only when the income is received by the assessee; unless and until the trustees exercise the discretion and distribute the income in favour of any of the beneficiaries, i.e. the assessee, such income cannot be said to be received by the assessee; merely on the basis o...

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FAQs by NGOS, Queries related to Income Tax Act, 1961

Q1 : Whether the Income-tax Act, 1961 is applicable to all the Voluntary Organisations who are engaged in socio-economic development programmes in India ? Please clarify. Ans : The Income Tax Act, 1961, is applicable to Voluntary Organisations which are engaged in public charitable or religious activity. Hence, Voluntary Organisations whi...

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Delayed TDS on ‘usance interest’ – Payment of interest u/s 201(1A)

IN the present case which was referred to the Third Member of the Tribunal, the dispute revolves around the issue of, whether interest u/s 201(1A) is payable on the ''usance interest'' from the date of payment or from the date of pronouncement of High Court decision in the Vijay Ship Breaking Corpn case...

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Is FBT Applicable on Charitable Trusts?

FBT is not payable by a trust, fund or institution if its income is exempt under section 10(23C) or it is registered under section 12AA of the Income-tax Act. Therefore, a company registered under section 25 of the Companies Act will also not be liable to FBT if its income is exempt under section 10(23C) or such company is registered unde...

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Incentives for Educational Institutions under Income-Tax Act, 1961

Presently, India is witnessing a knowledge and information technology boom. New BPO (Business Process Outsourcing) units and Call-Centres are being opened every day throughout the length and breadth of the country. In addition, KPO (Knowledge Process Outsourcing) units are also being established in view of tremendous demand for the same. ...

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Posted Under: Income Tax |

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