The treatment of business income for a charitable or religious trust under the Income Tax Act, 1961 is governed primarily by Sections 11(4) and 11(4A). Here’s a structured breakdown to help you navigate the nuances: Section 11(4): Business Held as Property Under Trust This applies when the business undertaking itself is held under trust. Income […]
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A. Basic Conditions for Section 11 (Income from Property Held for Charitable/Religious Purposes) Registration Requirement Must be registered under: Section 12A (old regime) Section 12AA (permanent registration) Section 12AB (provisional/new regime) Nature of Income Applies only to income from: Property held under trust Voluntary contributions (Section 12) Capital gains (if reinvested as per Section 11(1A))
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Under the Income Tax Act, 1961, the Commissioner of Income Tax (Exemption) [CIT(E)] has the authority to cancel or withdraw the registration granted to charitable/religious trusts under Sections 12A, 12AA, or 12AB. Here are the key provisions: 1. Legal Basis for Cancellation Section 12AA(3): Empowers CIT to cancel registration if: The trust’s activities are not genuine, or It is not complyingwith the conditions
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Section 13 of the Income Tax Act, 1961 specifies situations where the tax exemptions under Section 11 (for charitable/religious trusts) will NOT be available. These are anti-abuse provisions to prevent misuse of trust funds for private gain. 1. Private Benefit to Specified Persons [Section 13(1)(c)] Exemption is denied if trust income/property benefits: Founder/authorof the trust Substantial
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1. Covered Entities (Section 10(23C)) The following enjoy 100% tax exemption on their income: Funds/institutions for: Charitable purposes (iv) Religious purposes (v) Key institutions: Educational (iiiab) Medical (iiiac) Housing (iiiad) Sports (iiiae) Specifically notified: IITs/IIMs/AIIMS (vi) National importance institutions (viia) 2. Mandatory Conditions For continuing exemption: Registration: Must file Form 10BB (new) Income Application: 85%
Section 164(2) of the Income Tax Act, 1961, deals with the taxation of discretionary trusts, including charitable and religious trusts, where the beneficiaries’ shares are indeterminate or unknown. Below is a detailed analysis of its applicability, conditions, and tax implications. 1. Applicability of Section 164(2) This section applies when: ✅ Trust income is discretionary (beneficiaries’ shares are not fixed). ✅ Trust is not
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1. Key Provision (Section 13(8)) Introduced by Finance Act 2022(Effective AY 2023-24) Applies whena trust’s “aggregate receipts from commercial activities” exceed: 20% of total receipts(₹25 lakh threshold removed post-2023) Consequence: Entire incomebecomes taxable (not just commercial portion) 2. What Qualifies as “Commercial Receipts”? INCLUDED EXCLUDED • Fees from non-charitable services • Rental income from non-trust properties • Business
Introduced by the Finance Act, 2023, these provisions impose a “Ceasing Tax” on charitable/religious trusts that: Dissolve/terminate operations, or Convert into a non-charitable entity(e.g., private trust, company). 1. Key Provisions (A) Section 115TB: Charge of Tax Tax Rate: 30%(plus surcharge & cess) on the “net accumulated income” Applicable to: Trusts registered under Sections 12A, 12AA, 12AB Institutions approved under Section 10(23C) (B) Section
Here’s a detailed overview of Return of Income and Procedure of Assessment (Sections 139 to 154) under the Income Tax Act, 1961: 1. Return of Income (Section 139) Key Provisions: Mandatory Filing: Required for individuals, companies, firms, HUFs, etc., if income exceeds the exemption limit. Voluntary Returns: Even if income is below the threshold, taxpayers may file
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Section 139(1) of the Income Tax Act, 1961, lays down the rules for who must file an Income Tax Return (ITR) in India, when such filings are mandatory, voluntary, and the due dates applicable for various taxpayer categories. Who Must File an Income Tax Return under Section 139(1)? Filing an income tax return is mandatory
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