Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Assessment Of Trusts

Assessment Of Trusts [Sections 11 to 13]

Exemption Under Section 11 to 13 in case of Public Trusts for Charitable or Religious Purposes

The income derived from a property held under charitable or religious trusts is exempt from tax under section 11 subject to the fulfillment of certain conditions. However, any profit or gain of a business carried on by such trust shall not be exempt unless the business is incidental to the attainment of the objectives of …

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Accumulation of Income in excess of 15% of the income earned [Section 11(2) and Rule 17] by Public Trusts

As already mentioned, assessee is allowed to accumulate upto 15% of the income earned during the year for application for charitable or religious purposes in India in future. If the assessee wants to accumulate or set apart the income in addition to 15% of the income, he can do so if certain conditions are satisfied. …

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Points for Consideration towards Assessment of Public Trusts for Charitable and Religious Purpose

1.   Voluntary Contribution Received by the Trust: Voluntary contribution can be of two types: (a)   Voluntary contribution with a specified direction that they shall form part of the corpus of the trust or institution (Corpus Donations): Such voluntary contributions received by the trust are fully exempt under section 11(1)(d) and the condition that at …

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Modes of Deposit / Investment available to Public Trusts as per Section 11(5)

Section 11(5) specifies the following modes of Deposit / investment: (1)        Investment in Government Saving Certificates and any other Securities or Certificates issued by the Central Government under its Small Saving Scheme. (2)        Deposits with Post Office Savings Banks. (3)        Deposits with Scheduled Banks or Co-operative Banks (including a Cooperative Land Mortgage …

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Conditions for Applicability of Sections 11 and 12 in case of Public Trusts for Charitable and Religious purposes

The provisions of section 11 and 12 shall not apply in relation to the income of any trust or institutions unless the following conditions are fulfilled: (1) [Sections 12A(1)]- Registration of Trust As already discussed, for claiming exemption under sections 11 and 12, the trust must be registered under the Income-tax Act. (a)        Where …

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Procedure for Registration of a Trust or Institution made under Section 12AA

(1) [Section 12AA(1)]- Steps to be taken by the Principal Commissioner or Commissioner The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under section 12A(1)(aa) or (ab), shall— (a)        call for such documents or information from the trust or institution as he thinks necessary in …

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[Section 13]- Exemption of Income U/s 11 in case of Charitable or Religious Trust / Institution does not Apply in certain Cases

The following incomes of charitable or religious trusts/institutions shall not be eligible for exemption under sections 11 and 12. (1)        Any Part of the income from the property held under a trust for private religious purposes which does not ensure for the benefit of the public [Section 13(1)(a)]. Section 13(1)(a) shall not be applicable …

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[Section 13(2)]- When an Income or Property of a Trust or Institution is deemed to have been used or applied for the benefit of a Person referred to in Section 13(3)

The income or the property of the trust or institution or any part of such income or property is to be deemed to have been used or applied for the benefit of a person referred to in section 13(3) in the following cases: (1) [Section 13(2)(a)]- Interest free loan or loan without security  : If …

[Section 13(2)]- When an Income or Property of a Trust or Institution is deemed to have been used or applied for the benefit of a Person referred to in Section 13(3) Read More »

Income of certain Funds of National Importance, Educational Institutions and Medical Institutions is Exempt from Tax [Section 10(23C) and Rule 2C and 2CA]

Any income received by any person on behalf of the following is exempt from tax: Prime Minister’s National Relief Fund or the Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND) The Prime Minister’s Fund (Promotion of Folk Art); or The Prime Minister’s Aid to Students Fund; or The National Foundation …

Income of certain Funds of National Importance, Educational Institutions and Medical Institutions is Exempt from Tax [Section 10(23C) and Rule 2C and 2CA] Read More »

Levy of Tax where the Charitable Institution ceases to exist or converts into a Non- Charitable Organization [Chapter XIIEB containing Sections 115TD to 115TF]

1.   [Section 115TD]- Tax on Accreted Income of Trust or Institution (i)    [Section 115TD (1)]- Accreted income of Trust or Institution to be taxed at the Maximum Marginal Rate in certain cases: Notwithstanding anything contained in this Act, where in any previous year, a trust or institution registered under section 12AA has— (a)        …

Levy of Tax where the Charitable Institution ceases to exist or converts into a Non- Charitable Organization [Chapter XIIEB containing Sections 115TD to 115TF] Read More »