Formation, Management & Taxation of Charitable and Religious Trusts & Institutions

About the Book:

1. Introduction…………………………………………………………………………………….. 1
2. Public Institutions Exempt from Tax [Section 10]…………………………… 12
3. Non-Governmental Organisation (NGO)………………………………………. 28
4. Laws Governing Trusts/Institutions in India…………………………………. 37
5. Trust ……………………………………………………………………………………………… 42
6. Trust Created by Book Entries……………………………………………………….. 57
7. Public Trust …………………………………………………………………………………… 61
8. Private Trust …………………………………………………………………………………. 74
9. Family Trusts ………………………………………………………………………………. 120
10. Religious Trust…………………………………………………………………………….. 124
11. Society …………………………………………………………………………………………. 148
12. Private Limited Non-Profit Company [Section 8 of Companies
Act, 2013] …………………………………………………………………………………….. 155
13. Wakf (Charitable Trust)……………………………………………………………….. 168
14. Business Trust [Section 2(13A)]……………………………………………………. 180
15. Electoral Trust [Section 2(22AAA) & Section 13-B]………………………. 189
16. Unregistered Trust ………………………………………………………………………. 205
17. Trust Deed for Trust/Institutions …………………………………………………. 220
18. Types of Registration of a Charitable & Religious Trust………………. 247
19. Status of Charitable Trust or Institutions……………………………………… 250
20. Source of Income of a Trust …………………………………………………………. 252
21. Contribution from Foreign Countries [Under Foreign
Contribution Regulation Act (FCRA), 2010]…………………………………. 257
22. Rental Income of Trusts/Institutions ……………………………………………. 288
23. Agricultural Income of Trust……………………………………………………….. 297
24. Charitable Purpose [Section 2(15)]……………………………………………….. 301
25. Charitable Objects – ‘Relief of the Poor’ ……………………………………….. 315
26. Charitable Objects – ‘Education’…………………………………………………… 326
27. Charitable Objects – ‘Yoga’ …………………………………………………………… 349
28. Charitable Objects – ‘Medical Relief’ ……………………………………………. 354
29. Charitable Objects – ‘Prevention of the Environment
(Including Watersheds, Forests and Wildlife)’……………………………… 359
30. Charitable Objects – ‘Preservation of Monuments or Places
or Objects of Artistic or Historic Interest’ …………………………………….. 366
31. Charitable Objects – ‘Advancement of any Other Object
of General Public Utility’……………………………………………………………… 368
32. Income Includes Voluntary Contributions Received by a Trust
[Section 2(24)(iia)]………………………………………………………………………… 400
33. Educational and Medical Institutions [Section 10(23C)(iiiab) to
Section 10(23)(via)] ……………………………………………………………………… 404
34. Universities or Other Educational Institutions [Section 10(23C)
(iiiab), Section 10(23C)(iiiad) & Section 10(23C)(vi)]…………………….. 408
35. Hospitals or Other Medical Institutions [Section 10(23C)(iiiac),
10(23C)(iiiae) and 10(23C)(via)]……………………………………………………. 423
36. Exemption of Income of any University or other Educational
Institution Substantially Financed by Government
[Section 10(23C)(iiiab)]…………………………………………………………………. 435
37. Exemption of Income of any Hospital or other Institution
Wholly or Substantially Financed by Government
[Section 10(23C)(iiiac)]…………………………………………………………………. 441
38. Exemption for the Income Received by any University or
other Educational Institution if the Aggregate Annual
Receipts do not Exceed Five Crore Rupees
[Section 10(23C)(iiiad)] ………………………………………………………………… 445
39. Exemption for the Income Received by any Hospital
or Hospitals or Institution or Institutions if Annual
Receipts do not Exceed Five Crore Rupees
[Section 10(23C)(iiiae)]…………………………………………………………………. 450
40. Approved Fund or Institution Established for
Charitable Purposes [Section 10(23C)(iv)]……………………………………. 455
41. Approved Trust (Including Legal Obligation) or Institution
only for Public Religious Purposes or Wholly for Public
Religious and Charitable Purposes [Section 10(23C)(v)]………………. 462
42. Any University or Other Educational Institution Approved
by the Principal Commissioner or Commissioner
[Section 10(23C)(vi)]…………………………………………………………………….. 468
43. Exemption for the Income Received by any Hospital or Other
Institution Approved by the Principal Commissioner or
Commissioner [Section 10(23C)(via)]…………………………………………… 491
44. Provisos to Clause (23C) of Section 10 …………………………………………. 494
45. Essential Conditions for Claiming Exemptions under Section 11…. 541
46. Trust Eligible for Exemption under Section 11 …………………………….. 546
47. Income from Property held under Trust for Charitable
and Religious Purposes [Section 11(1)]………………………………………… 561
48. Trust Created wholly for Charitable or Religious Purposes
and Applying (or Accumulating) their Income to Such
Purposes, in India [Section 11(1)(a)]…………………………………………….. 581
49. Income from Property held under Trust which is Applied
in Part Only for Charitable or Religious Purposes
[Section 11(1)(b)]………………………………………………………………………….. 593
50. Income from Property held under Trust which is Applied for
Charitable Purposes Outside India [Section 11(1)(c)]…………………… 596
51. Voluntary Contribution Forming Part of Corpus
[Section 11(1)(d)]………………………………………………………………………….. 602
52. Where the Income Applied to Charitable causes falls short
of 85% of the Income Derived [Explanation 1 to Section 11(1)]…….. 627
53. Donation towards Corpus not Allowed as Application
of Income [Explanation 2 to Section 11(1)] …………………………………… 630
54. Disallowance due to TDS Violation & Cash Payments
[Explanation 3 to Section 11(1)]……………………………………………………. 631
55. Trust may at its option Treat such Corpus Donation as
Forming part of the Corpus Donation Subject to the
Conditions [Explanation 3A to Section 11(1)]………………………………. 632
56. For the Purposes of Explanation 3A, where any Trust
or Institution has Treated any Sum Received by it as Forming
part of the Corpus and subsequently any of the Conditions
specified in clause (a), (b), (c) or clause (d) thereof are
Violated, such Sum shall be deemed to be the Income
of such Trust or Institution [Explanation 3B to Section 11(1)]………. 634
57. For the Purpose of Determining the Amount of Application
of Income under Clause (a) or Clause (b) to Section 11(1)
[Explanation 4 to Section 11(1)]……………………………………………………. 635
58. No Carry Forward is Allowed [Explanation 5 to Section 11(1)]……. 644
59. Capital Gains Deemed to be Applied for Charitable/Religious
Purposes [Section 11(1A)]…………………………………………………………….. 645
60. Consequences if the Income is not Actually Applied within
the Prescribed Period after Exercising the Option
[Section 11(1B)] ……………………………………………………………………………. 661
61. Accumulation of Income in Excess of 15% of the
Income Earned [Section 11(2)]……………………………………………………… 663
62. Understanding of Form No. 9A and Form No. 10………………………… 681
63. Withdrawal of Exemption Granted to Income Accumulated
under Section 11(2) [Section 11(3)] ………………………………………………. 701
64. Circumstances where the Accumulated Income in Excess
of 15% can be Utilised for a Purpose other than that for
which it was Accumulated [Section 11(3A)]…………………………………. 708
65. Income from a Business Carried on by the Trust
[Section 11(4)]………………………………………………………………………………. 711
66. Profits and Gains from Incidental Business [Section 11(4A)] ……….. 722
67. Modes of Investment or Deposits by a Charitable or Religious
Trust or Institution [Section 11(5)]……………………………………………….. 745
68. For the Purpose of Accumulation or Setting Apart of Income
for Application, Depreciation on Assets, the Acquisition of
which has been Claimed as Application shall not be
Allowed [Section 11(6)]………………………………………………………………… 760
69. Assessee can either Obtain Registration under Section 12AB
or Obtain Approval under Section 10(23C), but he cannot
Adopt both [Section 11(7)] …………………………………………………………… 763
70. Voluntary Contributions (Donation) not Forming Part
of Corpus of the Trust or Institution Treated as Income
[Section 12(1)]………………………………………………………………………………. 771
71. Value of Medical/Educational Services Provided to
Specified Persons by Trust Running Hospitals and
Educational Institution – Exemption under Section 11 shall
not be Available for Services Provided to Specified Persons
[Section 12(2)]………………………………………………………………………………. 777
72. Amount of Donation Received by the trust or Institution which
has been Utilised for Purposes other than Providing Relief to
the Victims of Earthquake in Gujarat or which Remains
unutilised and not Transferred to the Prime Minister’s
National Relief Fund shall be Deemed to be the Income
Charged to Tax [Section 12(3)]……………………………………………………… 779
73. Conditions for Applicability of Sections 11 and 12
[Section 12A(1)]……………………………………………………………………………. 780
74. No Benefit of Exemption for Past Years [Section 12A(2)]……………… 792
75. Section 12AA – Procedure for Registration
[As applicable up to 31.03.2021]…………………………………………………… 795
76. Cancellation of Registration of the Trust or Institution
[Section 12AA(3) & 12AA(4)] [As applicable up to 31.03.2021]…….. 844
77. Procedure for fresh Registration of a Trust/Institution
[Section 12AB : Applicable from 01.04.2021]………………………………… 859
78. Cancellation of Registration or Provisional Registration
of a Trust or an Institution under Certain Circumstances
[Section 12AB(4) & Section 12AB(5)]……………………………………………. 893
79. Merger of Charitable Trusts or Institutions under First
Regime with Second Regime [Section 12AC]……………………………….. 909
80. Forfeiture of Exemption to Trust and Institutions
[Section 13(1)]………………………………………………………………………………. 911
81. Income for the Benefit of a Person Specified in Section 13(3)
[Section 13(2)] ……………………………………………………………………………… 938
82. Meaning of Specified Persons (as Referred to in Clause (c)
of Sub-section (1) and Sub-section (2) of Section 13)
[Section 13(3)]………………………………………………………………………………. 947
83. Exemption shall not be Denied if the Investment of the Trust or
Institution, in a Concern, in which the Specified Person has a
Substantial Interest [Section 13(4)]……………………………………………….. 954
84. Exemption under Sections 11 and 12 shall not be denied if
Debentures purchased after 28.02.1983 but before 25.07.1991
do not continue to remain invested beyond 31.03.1992
[Section 13(5)]………………………………………………………………………………. 956
85. Charitable Trusts do not Lose Exemption if Educational
or Medical Facilities Provided to Specified Persons
[Section 13(6)]………………………………………………………………………………. 957
86. Anonymous Donation Specified in Section 115BBC not
Exempt [Section 13(7)] ………………………………………………………………… 958
87. When Commercial Receipts Exceed the Specified Threshold
[Section 13(8)]………………………………………………………………………………. 959
88. In Case Return is not Filed by Prescribed Date then Benefit of
Accumulation under Section 11(2) will not be Available
[Section 13(9)]………………………………………………………………………………. 960
89. Allowing Certain Expenditure Incurred for its Objects,
Subject to Certain Conditions in Case of Denial
of Exemption [Section 13(10)]………………………………………………………. 961
90. No Deduction in Respect of any Expenditure or Allowance
or Set-Off of any Loss shall be Allowed to the Assessee
under any Other Provision [Section 13(11)] …………………………………. 966
91. Procedure for Registration for Exemption Certificate
under Section 80G ……………………………………………………………………….. 967
92. Requirement to File Statement of Donation and Issuance of
Certificate to Donor [Rule 18AB & Forms 10BD & 10BE]……………. 1017
93. Anonymous Donations to be Taxed in Certain Cases
[Section 115BBC]………………………………………………………………………… 1020
94. Specified Income of Certain Institutions [Section 115BBI]………….. 1039
95. Special Provisions Relating to Tax on Accreted Income
of Certain Trusts and Institutions
[Sections 115TD, 115TE and 115TF]……………………………………………. 1041
96. Furnishing of Return of Income by Trust/Institution …………………. 1061
97. Application of Income ……………………………………………………………….. 1074
98. Not Allowed as Application of Income………………………………………. 1108
99. Inter-Charity Donations (One Charitable Trust to Another)………. 1111
100. Tax Deducted at Source (TDS) Obligations of Trust/Institutions…… 1126
101 Penalties in Trust/Institution Cases ………………………………………….. 1136
102. Maintenance of Books of Accounts by the Trust or Institutions .. 1146
103. Audit of Accounts of Trusts/Institutions & Audit Report …………. 1158
104. Audit Report : Form 10B and Form 10BB for Charitable
Trusts/Institutions [Tenth proviso to clause (23C) of
section 10 & Section 12A(1)(b)] ………………………………………………… 1167
105. Extinguishment/Revocation of Trust ……………………………………….. 1196
106. Liability in Special Cases………………………………………………………….. 1199
107. Trusts/Institutions : Rate of Tax ………………………………………………. 1203
108. Computation of Income of Trust/Institution…………………………….. 1223
109. Income Tax Assessment of Charitable or Religious Trust or
Institution ………………………………………………………………………………… 1227
110. Limitation/Compliance Period in Respect of Various
Procedures, Applications, etc., for Trust or Institution …………….. 1236
111. Meaning of Important Terms……………………………………………………. 1249
112. Important Forms………………………………………………………………………. 1253