Formation, Management and Taxation of Charitable and Religious Trust and Institutions - Under Income Tax Law (As Amended by Finance Act, 2024)

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Description
In India, charitable and religious trusts play a vital role in enriching, our cultural heritage and in catering educational, medical, socio-economical and religious needs of people. Hence, since the introduction of the Income Tax Act, income derived from property held for charitable or religious purposes always enjoyed exemption from tax net. However, to ensure that tax privileges are not abused and are enjoyed only by deserving charitable and religious institutions, many changes have been made in provisions from time to time. Income of the Charitable and religious trusts is exempt from tax subject to some conditions. The exemptions are provided to the trust under various provisions of sections 10, 11 and 12 of the Income Tax Act, The law relating to charity has become very complex since its evolution and many controversial debatable issues have arisen. Provisions regarding charities are as much subject to instability as other provisions in the Income Tax Law by way of statutory amendments, instructions from time to time and the ever flowing precedents from the Courts and the Tribunal. Many Non-Government Organizations (NGOs) spread across the world are supplementing the efforts of the governments in promoting social welfare and economic development. Tax Administrators have also recognized the voluntary efforts of these Non-Governmental Organizations (NGOs) and provided tax incentives to those engaged in charitable activities.

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Content
Chapter 1:    Introduction
Chapter 2:    Public Institutions Exempt from Tax
Chapter 3:    Non-Governmental Organization (NGO)
Chapter 4:    Laws Governing Trusts/Institutions in India
Chapter 5:    Trust
Chapter 6:     Trust Created by Book Entries
Chapter 7:    Public Trust
Chapter 8:    Private Trust
Chapter 9:    Family Trust
Chapter 10:    Religious Trust
Chapter 11:    Society
Chapter 12:  Private Limited Non-profit Company
Chapter 13:  WAKF
Chapter 14:  Business Trust
Chapter 15:  Electoral Trust
Chapter 16:  Unregistered Trust
Chapter 17:  Trust Deed for Trust/Institutions
Chapter 18:  Types of registration of a Charitable & Religious Trust
Chapter 19:  Status of Charitable Trust or Institutions
Chapter 20:  Sources of Income of a Trust
Chapter 21:  Foreign Contribution
Chapter 22 : Rental Income of Trust/Institutions
Chapter 23:  Agricultural income of Trust
Chapter 24:  Charitable Purpose
Chapter 25:  Charitable Object-'Relief of the poor'
Chapter 26:  Charitable Object -'Education'
Chapter 27:  Charitable Object- 'Yoga'
Chapter 28:  Charitable Object- 'medical Relief'
Chapter 29:  Charitable Object- 'Prevention of the environment'
Chapter 30:  Charitable Object- 'Prevention of monuments or places or object of artistic or historic interest'
Chapter 31:  Charitable Object- 'Advancement of any other object of general public utility
Chapter 32: Income Includes Voluntary Contributions Received by a Trust
Chapter 33: Educational and Medical Institutions
Chapter 34: Universities or Other Educational Institutions
Chapter 35: Hospitals or Other Medical Institutions
Chapter 36: Exemption of Income of any University or Other Educational Institution Substantially Financed by Government
Chapter 37: Exemption of Income of any Hospital or Other Institution Wholly or Substantially Financed by Government
Chapter 38: Exemption for the Income Received by any University or Other Educational Institution if the Aggregate Annual Receipts do not Exceed Five Crore Rupees
Chapter 39: Exemption for the Income Received by any Hospital or Hospitals or Institution or Institutions if Annual Receipts do not Exceed Five Crore Rupees     
Chapter 40: Approved Fund or Institution Established for Charitable Purposes
Chapter 41: Trust (Including Legal Obligation) or Institution only for Public Religious Purposes or Wholly for Public Religious and Charitable Purposes
Chapter 42: Any University or Other Educational Institution Approved by the Principal Commissioner or Commissioner
Chapter 43: Exemption for the Income Received by any Hospital or Other Institution do not Exceed Five Crore Rupees
Chapter 44: Application for Approval of Educational Institution or any University or any Hospital or Other Medical Institution to be Made in Prescribed Form
Chapter 45: Pass an Order in Writing Granting it Approval for a Period of Five Years
Chapter 46: Application of Income and Investment of Funds Accumulation is permitted subject to conditions [Explanation 3 to Third proviso of section 10(23C)]
Chapter 47: Exemption not to be Denied in Certain Circumstances
Chapter 48 : Investment of Funds
Chapter 49: Contribution in Kind
Chapter 50: Business Income of any University or Other Educational Institution or any Hospital or Other Medical Institution shall be Chargeable to Tax, Unless the Business is Incidental to the Attainment of its Objects and Separate Books of Accounts are Maintained by it in Respect of Such Business     
Chapter 51: Any Approval Granted under the Second Proviso shall Apply in Relation to the Income of the Fund or Trust or Institution or University or Other Educational Institution or Hospital or Other Medical Institution     
Chapter 52: Order under Clause (i), Sub-Clause (b) of Clause (ii) and Clause (iii) of the Second Proviso shall be Passed, in Such Form and Manner as may be Prescribed, before Expiry of Period of Three Months, Six Months and One Month Respectively, Calculated from the End
Chapter 53: Trust or Institution or University or Other Educational Institution or Hospital or Other Medical Institution shall Keep and Maintain Books of Account and Other Documents Get its Accounts Audited
Chapter 54: Taxability of Donations Received for but not Applied, to Earthquake Relief in Gujarat
Chapter 55: Restriction on Exemption in Case of Corpus Donation by Exempt Entities to Other Exempt Entities
Chapter 56: Applicability of TDS Provisions & Restrictions on Cash Payments – Expenditure Incurred Without Deduction of Tax and in Cash will not be Eligible as Application of Income Under Section 10(23C)
Chapter 47: Exemption not to be Denied in Certain Circumstances
Chapter 48 : Investment of Funds
Chapter 49: Contribution in Kind
Chapter 50: Business Income of any University or Other Educational Institution or any Hospital or Other Medical Institution shall be Chargeable to Tax, Unless the Business is Incidental to the Attainment of its Objects and Separate Books of Accounts are Maintained by it in Respect of Such Business     
Chapter 51: Any Approval Granted under the Second Proviso shall Apply in Relation to the Income of the Fund or Trust or Institution or University or Other Educational Institution or Hospital or Other Medical Institution     
Chapter 52: Order under Clause (i), Sub-Clause (b) of Clause (ii) and Clause (iii) of the Second Proviso shall be Passed, in Such Form and Manner as may be Prescribed, before Expiry of Period of Three Months, Six Months and One Month Respectively, Calculated from the End
Chapter 53: Trust or Institution or University or Other Educational Institution or Hospital or Other Medical Institution shall Keep and Maintain Books of Account and Other Documents Get its Accounts Audited
Chapter 54: Taxability of Donations Received for but not Applied, to Earthquake Relief in Gujarat
Chapter 55: Restriction on Exemption in Case of Corpus Donation by Exempt Entities to Other Exempt Entities
Chapter 56: Applicability of TDS Provisions & Restrictions on Cash Payments – Expenditure Incurred Without Deduction of Tax and in Cash will not be Eligible as Application of Income Under Section 10(23C)
Chapter 57: Not be Treated as Application of Income to the Objects for which Such Fund or Trust or Institution or University or Educational Institution or Hospital or Other Medical Institution
Chapter 58: Non-Fulfilment of the Conditions Laid Down under Section 10(23C) and Withdrawal of Approval Granted to University or Educational Institution under Section 10(23C) (vi) or any Hospital or Other Medical Institution Referred to in Section 10(23C)(via)
Chapter 59: Any Anonymous Donation Referred to in Section 115BBC on which Tax is Payable in Accordance with the Provisions of the Said Section shall be Included in the Total Income
Chapter 60: All Applications Made under the Existing First Proviso, Pending before the Principal Commissioner or Commissioner, on which no Order has been Passed, shall be Deemed to be an Application Made under Clause (iv) of the First Proviso on that Date
Chapter 61: Eighteenth Proviso to Clause (23C) of Section 10
Chapter 62: All Applications Made under the Existing First Proviso, Pending before the Principal Commissioner or Commissioner, on which no Order has been Passed, shall be Deemed to be an Application Made under Clause (iv) of the First Proviso on that Date
Chapter 63: Fund or Institution or Trust or any University or Other Educational Institution or any Hospital or Other Medical Institution shall Furnish the Return of Income in Accordance with the Provisions of Section 139
Chapter 64: Unreasonable Benefit to Specified Persons
Chapter 65: Any Fund or Trust or Institution or University or Other Educational Institution or Hospital or Other Medical Institution Violates the Conditions Specified under the Tenth or Twentieth Proviso, or where the Provisions of the Eighteenth Proviso are Applicable
Chapter 66: For the Purposes of Computing Income Chargeable to Tax under Twenty-Second Proviso, 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
Chapter 67: Essential Conditions for Exemptions under Section 11
Chapter 68: Trust Eligible for Exemption under Section 11 Who is allowed exemption under section 11
Chapter 69: Income from Property held under Trust for Charitable and Religious Purposes
Chapter 70: Trust Created wholly for Charitable or Religious Purposes and Applying (or Accumulating) their Income to Such Purposes, in India
Chapter 71: Income from Property held under Trust which is Part Only for Charitable or Religious Purposes
Chapter 72: Income from Property held under Trust which is Applied for Charitable Purposes Outside India
Chapter 73: Voluntary Contribution Forming Part of Corpus
Chapter 74: For the Purpose of Determining the Amount of Application of Income under Clause (a) or Clause (b) to Section 11(1)
Chapter 70: Trust Created wholly for Charitable or Religious Purposes and Applying (or Accumulating) their Income to Such Purposes, in India
Chapter 71: Income from Property held under Trust which is Part Only for Charitable or Religious Purposes
Chapter 72: Income from Property held under Trust which is Applied for Charitable Purposes Outside India
Chapter 73: Voluntary Contribution Forming Part of Corpus
Chapter 74: For the Purpose of Determining the Amount of Application of Income under Clause (a) or Clause (b) to Section 11(1)
Chapter 75: Capital Gains Deemed to be Applied for Charitable/ Religious Purposes
Chapter 76: Consequences if the Income is not Actually Applied within the Prescribed Period after Exercising the Option
Chapter 77: Accumulation of Income in Excess of 15% of the Income Earned
Chapter 78: Understanding of Form No. 9A and Form No. 10
Chapter 79: Withdrawal of Exemption Granted to Income Accumulated under Section 11(2)
Chapter 80: Circumstances where the Accumulated Income in Excess of 15% can be Utilised for a Purpose other than that for which it was Accumulated
Chapter 81: Income from a Business Carried on by the Trust
Chapter 82: Profits and Gains from Incidental Business
Chapter 83: Modes of Investment or Deposits by a
Religious Trust or Institution
Chapter 84: For the Purpose of Accumulation or Income for Application, Depreciation Acquisition of which has been Claimed as Application shall not be Allowed
Chapter 85: Assessee can either Obtain Registration under Section 12AB or Obtain Approval under Section 10(23C), but he
cannot Adopt both
Chapter 86: Voluntary Contributions (Donation) not Forming Part of Corpus of the Trust or Institution Treated as Income
Chapter 87: 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
Chapter 88: Conditions for Applicability of Sections 11 and 12
Chapter 89: No Benefit of Exemption for Past Years
Chapter 90: Section 12AA - Procedure for Registration
Chapter 91: Cancellation of Registration of the Trust or Institution
Chapter 92: Procedure of Registration of a Trust/Institution
Chapter 93: Cancellation of Registration or Provisional Registratio Trust or an Institution under Certain Circumstances
Chapter 94: Merger of Trusts under First Regime with Second Regime
Chapter 96: Income for the Benefit of a Person Specified in Section 13(3
Chapter 97: Meaning of Specified Persons (as Referred to in Clause (c) of Sub-section (1) and Sub-section (2) of Section 13
Chapter 98: 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
Chapter 99: 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
Chapter 100: Charitable Trusts do not Lose Exemption if Educational or Medical Facilities Provided to Specified Persons
Chapter 101: Anonymous Donation Specified in Section 115BBC not Exempt
Chapter 102: When Commercial Receipts Exceed the Specified Threshold
Chapter 103: In Case Return is not Filed by Prescribed Date then Benefit of Accumulation under Section 11(2) will not be Available
Chapter 104: Allowing Certain Expenditure Incurred for its Objects, Subject to Certain Conditions in Case of Denial of Exemption
Chapter 105: 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
Chapter 106: Procedure for Registration for Exemption Certificate under Section 80G
Chapter 107: Requirement to File Statement of Donation and Issuance of Certificate to donor
Chapter 108: Anonymous Donations to be Taxed in Certain Cases
Chapter 109: Specified Income of Certain Institutions
Chapter 110: Special Provisions Relating to Tax on
Certain Trusts and Institutions
Chapter 112: Application of Income
Chapter 113: Inter-Charity Donations
Chapter 114: Not Allowed as Application of Income
Chapter 115: Tax Deducted at Source (TDS) Obligations of Trust/Institutions
Chapter 116: Penalties in Trust/Institution Cases
Chapter 117: Maintenance of Books of Accounts by the Trust or  Institutions
Chapter 118: Audit of Accounts of Trusts/Institutions & Audit Report
Chapter 119: Audit Report : Form 10B and Form 10BB for Charitable Trusts/ Institutions
Chapter 120: Extinguishment/Revocation of Trust
Chapter 121: Liability in Special Cases
Chapter 122: Trusts/Institutions : Rate of Tax
Chapter 124: Income Tax Assessment of Charitable or Religious Trust or Institution
Chapter 125: Limitation/Compliance Period in Respect of Various Procedures, Applications, etc., for Trust or Institution
Chapter 126: Meaning of Important Terms
Chapter 127: Important Forms
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Author Details
Ram Dutt Sharma got his post-graduation (M.Sc.) from M.D. University, Rohtak in 1980. He joined the Income-tax Department in the year 1983 and presently working as Income Tax Officer in Faridabad. He worked at various stations of North-West Region of Income Tax Department. He has wide experience of all wings of Income Tax Department such as assessment unit, Special Range, TDS Wing, Investigation Wing, Intelligence and Criminal Investigation etc. He has been contributing articles and addressing on topics relating to Income Tax at Direct Tax, Regional Training Institute, Chandigarh. He has also addressed number of seminars organized by the Income-tax Department, Chartered Accountants, Advocates and various Trade Associations. He is the author of number of books on direct taxes, namely Computation of income from salary under income tax law with tax planning, Computation of income from house property, Formation and Management of Charitable mad Religious Trust, Educational and Medical Institutions under income- tax law, Taxation of Non-Resident Indians under income-tax law etc. which have been highly appreciated by the readers. 
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