A trust can have the following types of Income: Donation Anonymous Donation Income from property held under trust for charitable or religious purpose Capital gain from an asset held under trust Now let's understand the taxability of these incomes S.no. Situation Income subject to tax Taxability 1 DoRead more
A trust can have the following types of Income:
Donation
Anonymous Donation
Income from property held under trust for charitable or religious purpose
Capital gain from an asset held under trust
Now let’s understand the taxability of these incomes
S.no.
Situation
Income subject to tax
Taxability
1
Donations
Donation with a specific direction to form part of corpus of the trust
Exempt from tax
Donation without such direction
Treated as S.no. 3
2
Anonymous donations
Donation exceeding higher of:
i) 5% of total donations received by trust or
ii) Rs 1,00,000
Taxed at 30%
Anonymous donation received by a trust established wholly for the religious and charitable purpose
Treated as S.no. 3
3
Income from property held under trust for charitable or religious purpose
15% of gross receipts from such trust property
Exempt*
85% of gross receipts from such trust property
(A) Exempt u/s Sec11(1) to the extent to which applied for the following purposes in the year of receipt:
1. Purchase of capital asset for trust
2. Repayment of loan taken for the purchase of a capital asset for trust
3. Revenue Expenditure incurred for trust
4. Donation to other trust registered u/s 12AA or u/s 10(23C)
(B) Income deemed to be applied for charitable purposes in India
a. Income is applied for charitable purposes in India in the year of receipt or in the immediately succeeding year.
b. On the basis of declaration under form 10 to the Assessing Officer on or before the due date of filing of return as per section 139(1) that such income shall be applied for such purpose in the year of receipt or succeeding year.
4
Capital gain from an asset held under trust
Net consideration has been used fully for acquiring another capital asset
Exempt*
Net consideration is utilized partially for acquiring another capital asset
Capital gain utilized in excess of the cost of the old asset transferred is exempt*
How should a trust use its income to get deduction under Income Tax Act?
A trust can have the following types of Income: Donation Anonymous Donation Income from property held under trust for charitable or religious purpose Capital gain from an asset held under trust Now let's understand the taxability of these incomes S.no. Situation Income subject to tax Taxability 1 DoRead more
A trust can have the following types of Income:
Now let’s understand the taxability of these incomes
i) 5% of total donations received by trust or
ii) Rs 1,00,000
1. Purchase of capital asset for trust
2. Repayment of loan taken for the purchase of a capital asset for trust
3. Revenue Expenditure incurred for trust
4. Donation to other trust registered u/s 12AA or u/s 10(23C)
(B) Income deemed to be applied for charitable purposes in India
a. Income is applied for charitable purposes in India in the year of receipt or in the immediately succeeding year.
b. On the basis of declaration under form 10 to the Assessing Officer on or before the due date of filing of return as per section 139(1) that such income shall be applied for such purpose in the year of receipt or succeeding year.