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.
- 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.
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.
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