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[Section 2(15)] : Exemption of Income of a Charitable & Religious Trust

Income of a charitable trust established in accordance with the provisions of Income Tax Act, being for charitable purposes shall be exempt from tax, subject to conditions laid down. A trust created for charitable purposeincludes relief of poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest,” and the advancement of any other object of general public utility, However, the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of an activity in the nature of trade, commerce and business, for a cess or fee or any other consideration, irrespective of the nature of use as application, or retention, of the income from such activity.

The above proviso shall not apply if the aggregate value of the receipts from the activities referred to above are 25 Iakh1 or less in the previous year.

Conditions for Exemption of Income of a Charitable Trust : —

According to the provisions of section 11 read with section 12A and 12AA of the Income-tax Act, income of trust shall be exempt from tax, if the following conditions are satisfied—

  1. The property should be held in trust for a charitable or religious purpose.
  2. 85% of its income including voluntary contributions (but excluding 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 as it is not to be included in total income) is actually spent in India for charitable or religious purposes or if the 85% of the income is not applied for such purposes but is accumulated or set apart for the reason mentioned in section 11(2); and
  3. The trust has made an application in Form No. 10A for registration to the commissioner and is so registered u/s 12AA of the Act.
  4. Where the total income of the trust before exemption u/s 11 and 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust for that year are audited by a chartered accountant and the audit report in Form No. 10B is filed along with the return of income.

Where the income actually spent on the objects of the trust during a previous year is less than 85% of the total income due to the reasons mentioned below, the deficiency can be made good at the option of the trustee to be exercised in writing before the expiry of the time allowed for furnishing the return of income under section 139(1)-

(i) where the deficiency is due to the reason that whole or part of the income which has accrued has not been received during the relevant previous year, such deficiency may be made good during the previous year in which such income has been actually received, or the next year;

(ii)where the deficiency is due to any other reason, the same is to be made good in the year immediately following the year in which the deficiency has occurred.

In case where the option is exercised, but the income so promised is not utilised in the year as referred to in clause (i) or in the succeeding previous year as referred to in clause (ii), then such promised income is to be treated as the income of the previous year immediately following the previous year in which the income was received or the income of the previous year next following the previous year in which the deficiency occurred, as the case may be.


What is ‘Charitable Purpose’ for Income Tax Purposes ?  [Sec. 2(15)]
Laws Applicable to Charitable Institutions/Trusts
Provisions Relating to Anonymous Donations & Gifts [ Sec. 11 5BBC ]
Formation Of A ‘Charitable & Religious Trust’
TRUST DEED of A ‘Charitable & Religious Trust’
Practical Tips on Drafting of Trust Deed of A ‘Charitable & Religious Trust’
Need for Registration of A “Charitable & Religious Trust”
Types of Registrations of A “Charitable & Religious Trust”
Procedure for Registration of Trust under the Indian Trusts Act, 1882
Registration of Trust under Sections 11 & 12 of the Income Tax Act, 1961
Cancellation of Registration of A “Charitable & Religious Trust”
Belated Filing of Application for Registration of A “Charitable & Religious Trust”
Practical Problem on Registration of a ‘Trust’ U/s. 12A
Creation of a Valid Charitable or Religious Trust
Income Tax Provisions For A “Charitable & Religious Trust”
‘Exemption’ Provisions For A “Charitable & Religious Trust”
Approval Of “Trust”  U/S 80G Of The Income Tax  Act. To Give Some Benefits To Its Donors.
Deduction To A Trust U/s 35AC
Power Of The ‘Trustees’ Of ‘Trust’
[Section 2(15)] : Exemption of Income of a Charitable & Religious Trust
[Section 11(2)] :      Accumulation or Setting Apart of the Trust Income for a Specific Purpose
[Section 11(4)] : Income from Business Undertaking of Property held under ‘Charitable Trust’ in Excess of the Income Shown in the Account
[Section 11(5)] : Forms or Modes of Money Accumulated or Set Apart of Trust Income Invested or Deposited
Trust Partly for Charitable or Religious Purpose and Partly for Other Purposes
[Section 11(1A)] : Capitai Gains Of The Trust For Charitable Purposes
[Section 12] : Income Of Religious Trusts Or Institutions From Voluntary Contributions
[Section 12AA] : Procedure For Registration Of A Trust Or Institution
[Section 13] : Income Of Charitable Or Religious Trust Does Not Qualify for Exemption u/s 11 or 12
Electoral Trusts Scheme, 2013 (Vide Not.No. SO. 309(E), dated 31.01.2013)
Functions Of Electoral Trusts - ET [Rule 17CA] [Vide Not.No. SO. 308(E), dated 31.01.20131.]
Important Points To Be Consider While Filing The Return Of A Charitable Trust Or Religious Institution:
Private Charitable Or Religious Trusts  ( Sections 161, 164 & 166 )
[Section 164(1)]: Where Shares Of The Beneficiaries Of a Private Discretionary Trust Are Indeterminate Or Unknown :
Property held under Trust Partly For Religious Purposes And Partly For Other Purposes :
ORAL TRUST [Sections 160(1)(v) and 164A ]
[Section. 167B] : Association Of Persons (AOP) And Body Of Individuals (BOI)
Tax Rates applied on Charitable or Religious Trusts
[Section-67A] :  Method Of Computing A Members Share In Income Of Association Of Persons (AOP) Or Body Of Individuals (BOI)
Provisions to Securitisation Trusts [As introduced by the Finance Act, 2013]
Definition of ‘Securitization Trusts’ as per SARFAESI Act.
Definition of ‘Securitization Trusts’ as per the SEBI Regulations
Definition of ‘Securitization Trusts’ as per the RBI Guidelines
Provisions relating to Tax on Distributed Income by Securitisation Trust
BUSINESS TRUSTS – Meaning & Provisions
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