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Income Tax Exemption For Ngo

TRUSTS:
Under section 11(1)(a) to (c), the income derived from property held under trust is exempt if the following conditions are satisfied:

  • The property should be held under trust wholly for charitable or religious purposes.
  • Income from such property should be applied to charitable or religious purposes. (Exemption is available to the extent of such application)
  • Income should be applied in India
  • At least 85% of the income derived from property held under trust, should be applied to charitable or religious purposes in the relevant previous year in order to claim full tax exemption.

Note :
  • The assessee is to apply for registration in Form No. 10A in duplicate before the expiry of 1 year from the creation of trust.
  • Under Section 11(4) property held under trust includes a business undertaking held under trust.
  • Any voluntary contribution received by a trust or institution is exempt if (a) the trust is created wholly for charitable purposes and (b) contribution is not made with a specific direction that it shall form part of the corpus of the trust.

SOCIETY: Societies are taxable in the status of AOP, and different rates of tax are applicable to the income of an AOP in diverse circumstances:

A. Individual shares of members in AOP are not determinate: i. Where the total income of any member of the AOP is taxable at a rate greater than the maximum marginal rate-Rate of tax is such higher rate.
ii. Otherwise-30%


B. Individual shares of members in AOP are determinate:

i. If the grand total income of any member is not higher than Rs. 50000/- (excluding share from AOP) and no member is taxable higher than 30%- Rate of tax on total income of AOP is the rate applicable to individuals.

ii. If total income of any member is higher than Rs. 50000/- (excluding share from AOP) and no member is taxable higher than 30%- Rate of tax is 30%

iii. If any member is taxed higher than 30%, then (a) Tax on the portion of total income of AOP that is relatable to the share of such member is levied at such rate higher than the 30%, (b) tax on the balance total income will be 30%.



Tax Exemption For Notified Charitable Societies U/S 10(23c) (IV) And (V)n

Any income of any institution set up for the charitable purposes is exempt. For getting exemption under these clauses, the following requirement must be completed:
  • i. Making an application in Form No. 56.
  • ii. Applying its income or accumulating it for application, wholly & exclusively to its objects.
  • iii. Notice of accumulation u/s 11(2) will have to be given to the assessing officer in Form No. 10

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