Exempted Incomes under Section 11 in case of Charitable Trusts and Religious Institutions
Subject to the provisions of sections 60 to 63, the following incomes of a religious or charitable trust or institution are not included in its total income, provided the conditions mentioned are satisfied:
1. [Section 11(1)(a)]: Income from Property held under Trust wholly for Charitable or Religious Purposes
Income derived from property held under trust, wholly for charitable and religious purposes, shall be exempt—
(i) to the extent such income is applied in India for such purposes;
(ii) where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of 15% of the income from such property.
2. [Section 11(1)(b)]: Income from Property held under Trust which is applied in part only for Charitable or Religious Purposes
Income derived from property held under trust in part only for such purposes, shall be exempt:
(i) to the extent such income is applied in India for such purposes, provided, the trust in question is created before the commencement of Income-tax Act, 1961, i.e., before 1.4.1962; and
(ii) where any such income is finally set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of 15% of the income from such property.
3. [Section 11(1)(c)]: Income from Property held under Trust which is applied for Charitable Purposes outside India
(i) Income derived from property held under trust, created on or after 1.4.1952 for a charitable purpose which tends to promote international welfare in which India is interested, shall be exempt to the extent to which such income is applied to such purpose outside India. Religious trusts are not covered here.
(ii) Income derived from property held under a trust for charitable or religious purposes, created before 1.4.1952, shall be exempt to the extent to which such income is applied to such purposes outside India.
In the above two cases, it is necessary that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income.
4. [Section 11(1)(d)]:Voluntary Contributions forming part of Corpus
Income in the form of voluntary contributions made with a specific direction, that they shall form part of the corpus of the trust or institution, shall be fully exempt. The condition that at least 85% of the income should be applied during the previous year in which it is earned is not applicable in this case.
Corpus to be invested or deposited in a mode specified in section 11(5) [Section 11(1)(d) amended w.e.f. A.Y. 2022-23
Voluntary contributions made with a specific direction that they shall form part of the corpus shall be exempt subject to the condition that such voluntary contributions are invested or deposited in one or more of the forms or modes specified in section 11(5) maintained specifically for such corpus.
Where assessee received corpus donation on which it earned interest, in view of specific direction of donors that said interest would also form part of corpus, assessee’s claim for exemption under section 11 in respect of interest so earned was to be allowed.
