Opinion Of Eminent Legal Luminaries On Controversial Issues

Denial of exemption-Trust or institution-Investment restrictions

QUERY: If a Section 25 company is registered as charitable trust whether threshold limits of
Rs. 2,50,000/- will be available to the company as charitable trusts are assessed as AOP? Similarly what will be the threshold limit applicable in case a society is registered as charitable trust?

ANSWER: Income derived by charitable or religious trust is exempt from tax to the extent to which such income is applied to charitable or religious purposes or is accumulated or set apart, in accordance with the provisions of Income-tax Act, for application to such purpose.
Charitable or religious trust loses the exemption if any part of the income or any property of the trust is used or applied during the relevant year, directly or indirectly for the benefit of specific categories of persons or trust fund is invested in contravention of the investment pattern for such funds as laid down under the Act.
If the whole or any part of the income of a charitable or religious trust is not eligible for exemption in the circumstances mentioned above tax is charged on such income at maximum marginal rate applicable to individuals, AOP, etc. without threshold limit.

Posted in Income-tax

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