Income tax Provisions - Question and Answer on Trust

1. One of the trust got registered under 80G and 12AA on 15th March 2020 against the application made in December 2019. Are they need to apply for fresh registration again on or before 31stAugust 2020 as per the new provisions?

-     Yes. You need to apply for fresh registration on or before 31st  August

2020.

2. If a new Trust applies for new registration u/s 12AB in FY 20-21,Will it get  registration  from  the  date  of  application  or  from  April  2021?  In second case how this trust will get benefit u/s 11 in first year?

-     You will get the registration from the 1st April, 2020.

3. Can religious trust do incidental business without 20% restrictions?

-     Yes, if it is related with the objects of the trust.

4. Query relating to 11(1)(a)

An educational institution is receiving salary grants from government. The said grants are directly credited in the account of employees by the Government. While for the purpose of accounting they shown the grant as income of Trust and simultaneously expenses of Trust. For calculation of  15% u/s 11(1)(a) whether Total income including salary grant shall be considered or Total income excluding salary grant?

Sr. No.	Particulars	Remarks
1	Trust  or  Institute  Running Commercial Activity	15% of Net Surplus of Commercial Activity plus Gross receipt of Non- Commercial Activity.
2	Trust     or     Institute     Not running Commercial Activity	15% of Gross Receipts.

5. Whether an unregistered trust under income tax has to file its return in

ITR-7 or ITR-5?

-     ITR-5

6. Whether institutions wholly and substantially financed by Government

Grant required to get approval u/s 10(23C)?

-     No. If any institutions wholly and substantially (more than 50% of Gross receipts) financed by Government Grant the no need to get approval u/s

10(23C).

7. A trust registered under 12A has incurred capital expenditure of 6 lakhs and also received the same amount of specific donation in the same year. Can trust claim donation under 11(1)(d) and as well as claim expenditure incurred against earlier year’s accumulated amount which was invested in specified mode by filing form 10 even though same investment is not withdrawn?

-     Yes

8. Query  related  to  10(23)(iiiab)   -  Is  there  any  remedy  available  for institution claiming exemption 10(23C)(iiiab) for substantial financed by Govt. If at the end of previous year, it will come to known that financed by govt is less than 50%?Any other exemption / undertaking is available?

-     Then go for section 12AA

9.   An Industrial Association registered u/s 12AA for Advancement of any Other General Activity. The Trust charges Water Supply Charges (as maintenance charges) from all members and against that pays electricity charges to corporation and do other maintenance activities. If surplus arise from this activity would it be treated as business income if gross receipts exceeds Rs 25 lakh?

-     No

10. A Public Charitable Trust registered earlier about 15 years back has misplaced its registration certificate u/s. 12AA. It also does not have in its records the registration number. Department is also not able to help in this regard.How to apply in the new form without these details?

- Onus is on Trust to produce document, otherwise it would be treated as unregistered.

11. Can a Public Charitable trust advance loan to its trustees or its related concern or to any other person?

-No

12. Under    new   provision    whether   a    entity    (audited    or              unaudited entity)paying commission to charitable trust  are required to deduct TDS from payment?

-     Yes

13. Is it compulsory to submit accounts at charity commissioner? What are the consequences if not submitted?

-     Consequences and penalty under the Trust Act

14. Educational society registered under 12 with turnover below 1 crore want                   to    surrender      12  registration             to           opt for               10(23c).                 Will        the accumulated income of 15% will be taxed or fair market value of asset will be taxed?

-     No

15. Is it compulsory to file income tax return within due date u/s 139(1) to get benefit of exemption?I have observed in some of cases online portal disallowed exemption if return is filed after due date while manual, they are allowing exemption even though late filling of return.

-     It is compulsory for claiming exemptions.