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· Approval under this section is a onetime approval UNLESS it is withdrawn
· Withdrawn if it is believed that income is not applied or not invested as per the provisions of the approval.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