Accounts Knowledge Hub

Finance, Taxation and All Statutory Information For Everyone

Accounts Knowledge Hub

Finance, Taxation and All Statutory Information For Everyone

Incometax

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·         Approval under this section is a onetime approval UNLESS it is withdrawn
·         Withdrawn if it is believed that income is not applied or not invested as per the provisions of the approval.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