trust taxation
pramod patil
(Querist) 21 February 2010
This query is : Resolved
trust is registered under BOMBAY PUBLIC TRUST ACT 1950 AND SOCITIES ACT 1860. WHICH KIND OF TAXES ARE APPLICABLE TO TRUST AND SECONDLY HOW TO OBTAIN 80 G AND 35 AC CERTIFICATES. PLEASE GUIDE
Dr.Anjani Kumar Vaidyasen,09431271130,Patna
(Expert) 21 February 2010
Dear Sir,
It is not mentioned in your query the date of formation of trust.It is also relevent to explain the category of trust.
Every trust or NGO are liable to file IT return in the office Income Tax Department.
Firstly you will have to registered your trust under 12A of the IT Act,1961 thereafter your trust will get registration under 80G.
Please explain in details your status before any query and excuse us if you feel any inconvenience.
In future you may contact an email-akvaidyasen@gmail.com
Thanks with regards.
A V Vishal
(Expert) 21 February 2010
Following steps are involved in getting registered with Income Tax Department
Apply to DG(Exemption ) or CIT(Exemption) of the city where the office of the socity is situated in Form 10A in duplicate.
Enclose list of name and addresses of subscriber /trustees
Enclose copy of registration certificate issued by Registrar or other authority.
Copy of the MoA /trust deed duly certified as true copy.
PAN of Society and its members .
Bank account opening details.
Copies of accounts of last there years or less as case may be.
The Commissioner of Income Tax on being satisfied with the documents and other criteria shall pass an order, after giving opportunity of being heard, within six months from end of the month in which the application was made , either granting registration or rejecting the application.On being granted the registration ,the society can claim exemption from the financial year in which application was made.
A V Vishal
(Expert) 21 February 2010
The procedure of getting approval under section 80G of the I T Act by the society is given in Rule 11AA of I. T. Rule . which is summarized below
1. The application for approval should be in Form No.10G and shall be made in triplicate.
2. The application should be accompanied by the following documents, namely:-
(i) Copy of registration granted under section 12A or
copy of notification issued under section 10(23) or 10(23C);
(ii) Notes on activities of institution or fund since its inception or during the last three years, whichever is less;
(iii) Copies of accounts of the institution or fund since its inception or during the last three years, whichever is less.
You should also note that as per Rule 11AA the commissioner may call for more information or documents in order to satisfy himself about the genuineness of the activities of such institution or fund and being satisfied ,he may grant approval specifying the assessment year or years for which the approval is valid. If commissioner rejects the application, he must give opportunity of being heard to the applicant , as per Rule 11AA(5).
The time limit?
The commissioner has to pass the order either granting the approval or rejecting the application within six months from the date on which such application was made , however in computing the period of six months, any time taken by the applicant in not complying with the directions of the Commissioner under sub-rule (3) shall be excluded.
What are the conditions to be satisfied for 80G registration?
As per section 80G (5) of the I T Act , conditions to be satisfied for registration u/s 80G are
i) It is established in India for a charitable purpose
ii) Its income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 or clause (23AA) or clause (23C) of section 10.
(iii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose;
(iv) the institution or fund is not expressed to be for the benefit of any particular religious community or caste;
(v) the institution or fund maintains regular accounts of its receipts and expenditure;
(vi) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 25 of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognized by the Government or by a University established by law, or affiliated to any University established by law or is an institution financed wholly or in part by the Government or a local authority; and
(vii) the institution or fund is for the time being approved by the Commissioner in accordance with the rules made in this behalf: Provided that any approval shall have effect for such assessment year or years, not exceeding five assessment years , as may be specified in the approval.
A V Vishal
(Expert) 21 February 2010
INTRODUCTION
01 As we already know that an NGO can avail income tax exemption by getting itself registered and complying with certain other formalities, but such registration doesn't provide any benefit to the persons making donations. The Income Tax Act has certain provisions which offer tax benefits to the "donors". All NGOs should avail the advantage of these provisions to attract potential donors. Section 35AC is one of such sections.
REGISTRATION UNDER SECTION 35Ac
02 The Central Government approves certain NGOs and notifies them as eligible for project or schemes for the purposes of section 35AC. If an NGO succeeds in getting such an approval for its projects then it stands a very good chance of mobilising funds from the corporate and the business sector. Business houses making contribution to such approved projects are allowed the benefits of deducting such contribution as expenditure.
NATIONAL COMMITTEE
03 The Central Government has constituted a National Committee to identify projects and schemes to be notified under section 35AC, such committee normally consists of eminent persons. All NGOs are entitled to apply to the National Committee to get its projects or schemes approved.
WHERE THE APPLICATION IS TO BE MADE
04 The application for approval by the National Committee should be made to the Secretary, National Committee for Promotion of Social & Economic Welfare, Dept. of Revenue, Govt. of India, North Block, New Delhi - 110001.
THE APPLICATION AND ITS ENCLOSURE
i) The application is to be made in 2 Sets, written either in Hindi or English.
ii) Details such as name, address and status of applicant, the district/ ward circle where assessed/PAN number.
iii) Audited Balance Sheet, Profit& Loss Account or Income& Expenditure Account for the latest year and two preceding years.
iv) How is it constituted i.e. whether as a trust, society, etc supported by relevant documents like trust deed, rules & regulation, memorandum of association etc. and registration certificate, if any.
v) Name & Addresses of the persons managing the affairs of the association or institution, including those who left the organisation but were managing the affairs of the association or institution during the 3 years preceding the date of application.
vi) If the association or institution is notified under section 10(23)(C) or is approved for the purposes of section 80G, the particulars of such approval granted.
vii) Brief particulars of the activities of the association or institution during 3 years preceding the date of application or since inception if the association or institution is less than 3 years old.
viii) Such other information as the association or institution may like to place before the National Committee.
ADDITIONAL INFORMATION REGARDING THE PROJECT/SCHEME TO BE SUBMITTED
(i) Title of project or scheme;
(ii) Date of commencement;
(iii) Duration and the likely date of completion;
(iv) Estimated cost of the project ;
(v) Category or class of persons who are likely to be benefited from the project or scheme;
(vi) Affirmation that no benefit from the project or scheme other than remuneration or honorarium, will accrue to persons managing the affairs of the NGO ;
(viii) Such other particulars as the applicant may place before the National Committee.
CERTIFICATE TO BE ISSUED TO THE DONOR
05 All approved NGOs are required to issue a certificate to the donor for all contributions & receipts under section 35AC. The certificate is to be issued in Form 58A.
06 This certificate will enable the donor to claim exemption from its taxable income. Further, the NGOs should also send an Annual Report to the National Committee indicating the progress of the work relating to the project/scheme and the following informations in respect of each contributor :
i) name of the contributors & their addresses.
ii) PAN.
iii) amount of contributions.
iv) the project/scheme for which the contribution is made.
v) total amount of contribution received during the year.
vi) total cost of the project approved by the National Committee.
07 Such Annual Report should reach the National Committee by 30th June, following the financial year in which the amount is received.
DEDUCTION OF CONTRIBUTION UNDER SECTION 80GGA
08 Section 35AC is available to assessees who have income from the head ‘business’ or ‘profession’. Therefore, for the assessees who do do not have income from business or profession, section 80GGA provides for deduction on donations made to eligible projects under section 35AC. Section 80GGA, is a broader section and deductions are also available for contributions made for scientific research under section 35CCA & 35CCB, which have been withdrawn. 100 per cent deduction is available under section 80GGA, subject to the available gross total income under section 80A. Therefore, unlike section 35AC, deduction under section 80GGA cannot be carried forward in the form of losses to next year .
OVERALL SUMMARY
09 To sum up the discussions :
i) Under section 35AC, organisations having income from business or profession can get 100 per cent deduction. Charitable Organisations can get registered themselves u/s. 5AC by applying to the National Committee under rule 11F to 11-O, if they are carrying on any business.
ii) The Central Goverment has specified various types of projects of national needs for which Charitable Organisations can make donations.
iii) Business houses making donations for the purpose of section 35AC, should be careful that the donee organisation continues to enjoy approval u/s. 35AC. As the approval under section 35(AC) is not permanent in nature.
iv) To get approval u/s. 35AC two sets of application have to be made alongwith specified enclosures to secretary of National Committee, New Delhi.
v) The National Committee may recommend or reject the project but when the approval is recommended then it is for a period of maximum 3 years and it could be further extended if the National Committee is satisfied with the performance during the period.
vi) A certificate has to be issued to the donor in Form 58A. This certificate will enable the donor to claim exemptions.
vii) The National Committee may withdraw the approval if the project is not carried out in accordance with the approved conditions. To withdraw a project National Committee should provide an opportunity of being heard to the aggrieved organisation.
viii) Section 35AC provides deduction from income from business and profession. Similar deduction is also available u/s. 80GGA, for assessees having income from other heads.
pramod patil
(Querist) 27 February 2010
THANKS Dr. ANJANI AND Mr. VISHAL.
ONE TRUST IS REGISTRED IN 2000 AND OTHER IN 1996
