Tax libility for TRUST

“IF GROSS RECEIPTS FROM A COMMERCIAL ACTIVITY EXCEEDS RS. 25 LAKHS, TRUST WILL NOT BE REGARDED AS CHARITABLE INSTITUTION”

“ANONYMOUS DONATION: EXEMPTION UPTO: 5% of the Total Donations or Rs. 1 Lakh, whichever is less. The balance Anonymous Donations would be taxed at 30% u/s 115BBC.”
“Income from Business & Profession & Capital Gains- Exempt form TAX”



      1)      TRUST DEED
·         Name of the Author/ Settlers
·         Name of the first trustees and the beneficiaries
·         Name of the trust
·         Power, Duties, Rights and Obligations of the trustees
·         Place where the principal office of the trust would be situated
·         Mode and method of distribution of property of the trust.
       2)      REGISTRATION WITH CHARITY COMMISSIONER
·         Application to be made within 3 months of the date of execution of the trust deed.
                   Application containing-
·         Name of the Trust
·         Names & Addresses of the Trustees
·         Managers of the Trust
·         Mode of succession of office of the trustees
·         Approximate value of the movable & immovable property held by the trust
·         Address for communication
       3)      REGISTRATION WITH THE SUB-REGISTRAR
·         Memorandum of Trust in prescribed form
·         All the details as in 2 above
       4)      SECTION 10(23C)
·         Application to Chief Commissioner or Director General of Income Tax in Form No. 56D
·         Approval under this section is a onetime approval UNLESS it is withdrawn
·         Withdrawn if it is believed that income is not applied or not invested as per the provisions of the approval.
       5)      SECTION 12AA
·         Application to Commissioner of Income Tax in Form 10A.
·         Within 1 year from the date of creation of trust or establishment of financial institution.
·         Order of Registration must be passed before the end of 6 months from the end of the month in which the application for the registration was received.
·         Can be cancelled by Commissioner, if he is satisfied that the activities are not being carried out in accordance with the objects of the institution.


       6)      SECTION 80G
·         Allows the deduction of 50% of the donation made to the charitable trust.
·         Approval of Registration is covered by the RULE 11AA of the Income Tax Rules, 1962
·         Application in Form 10G in Triplicate accompanied with following documents
·         Copy of Registration granted under Section 12A or Copy of Notification issued under Section 10(23) or 10(23C)
·         Note on activities of the institution or fund since its inception or during the last 3 years, whichever is less
·         Copies of accounts of the institution or fund since its inception or during the last 3 years, whichever is less
·         As per Income Tax circular No. 7/2010 [F. No. 197/21/2010-ITA-I], dated 27-10-2010, any registration granted u/s 80G(5) on or after 01/10/2009, shall be a onetime registration and shall be valid unless specifically withdrawn.
·         Must be granted within 6 months of filling of application
     7)      SECTION 35AC
               Where an assessee incurs expenditure by way of a payment of any sum to a public sector
                company or a local authority or to an association or institution approved by the National  
                Committee for carrying out any eligible project or scheme, the assessee shall be allowed a  
                 deduction of the sum so paid by him in the previous year.
                For getting approval for the eligible project or scheme under this section
·         Application in English with details – Name, Address and status of applicant
·         PAN
·         Audited Balance Sheet, Profit & Loss or Income & Expenditure for the latest year and two preceding years
·         Trust Deed, Rules & Regulations, Memorandum of Association, Registration Certificate
       8)      TAXATION OF CONTRIBUTORS
·         SECTION 80G – 50% of the contribution made by an assessee to an approved charitable trust subject to the condition that MAXIMUM permissible deduction is 10% of Adjusted Total Income i.e. Total Income – 80CCC to 80U (except 80G) – Exempt Incomes – LTCG & SEC 115A, 115AB, 115AC, 115AD, 115D.
·         SECTION 35AC – Entire Contribution 

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