Income Tax Return Filling For Charitable Trust
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Introduction
Charitable Trusts/Societies/Foundations are all covered under the head of NGO i.e. Non-Governmental Organisations that works for the social and economic welfare of the society. There are different forms of organisations that can be formed for raising out a hand for charitable activities.
‘Charitable purpose’ includes relief of poor people like education, medical relief, and the advancement of any object of general public utility. One of the benefit which NGOs have is Under Section 80G.
Advantages Of ITR FIling For Society/Trust
ITR Form
- Return by charitable trust (section 139(4A)): Return under section 139(4A) is required to be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.
- Return by agency (section 139(4C)): Return under section 139(4C) is required to be filed by every:
1. Scientific research association;
2. News agency
3. Association or institution referred to in section 10(23A)
4. Institution referred to in section 10(23B)
5. Fund or institution or university or other educational institution or any hospital or other medical institution.
- Return by business trust (section 139(4E): Return under section 139(4E) must be filed by every business trust which is not required to furnish return of income or loss under any other provisions under this section.
- Return by political party (section 139(4B): Return under section 139(4B) is required to be filed by a political party if the total income without giving effect to the provisions of section 139A exceeds the maximum amount, not chargeable to income-tax.
- Return by university, colleges (section 139(4D): Return under section 139(4D) is required to be filed by every university, college or other institution, which is not required to furnish return of income or loss under any other provision under this section.
- Return by investment fund (section 139(4F): Return under section 139(4F) must be filed by any investment fund referred to in section 115UB. It is not required to furnish return of income or loss under any other provisions of this section.
Documents Required
- Pan card of the Charitable Institution
- Details of all the members/directors of Charitable Institution
- Payment and Receipt Statement
- Previous Statement, if filed any
Step 1. Fill the simple questionnaire provided by our team.
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Additional Information
Eligibility to take Exemption
- The trust should be registered as Charitable Trust with the Commissioner of Income Tax which is eligible for exemption under the Act. The registration shall be made as per the guidelines laid under Section 12AA of the Act.
- The property of the trust should be bound by a trust deed or another similar legal obligation.
- The income of the trust should not be used for the benefit of the any person who is directly or indirectly related to charitable institution.
- In case the income of the charitable institution exceeds the basic exemption limit, the trust should mandatorily submit the books of accounts for the purpose of audit.
Due dates for filling Income Tax return (make a chart/box)
- September 30 – Where a Trust is required to get its accounts audited under the Income Tax Act or under any other law.
- November 30 – Where a Trust is required to file Form No. 3CEB. Form 3CEB will be required if the trust has entered into certain types of related party transactions.
- July 31 – Where Trust does not need to get its accounts audited.
- The trust should not have been created for the benefit or promotion of any particular religious community or caste group.
- The purpose of holding the property should be for the charitable or religious purpose.
- An exemption will be available only for the portion of the income which is used towards charitable or religious purposes.
- Income derived from property held under trust or of an institution wholly for charitable/religious purpose is exempt, if 85% of the income is spent on the objects of the trust, during the year. If the amount spent is less than 85% of the income, the shortfall is taxable.
Penalty of non filling Income Tax Return
FAQ's On ITR Filing For Societies/Trust
Once money is placed into the trust, the interest it accumulates is taxable as income, either to the beneficiary or the trust itself. The trust must pay taxes on any interest income it holds.
Yes, it is mandatory for all trusts covered under Sections 139(4A), 139(4C), 139(4D) and 139(4E) to file income tax return. For other trusts not covered under these sections, have to file ITR in case their income exceeds the thresh hold limit as prescribed under Income Tax. In case the Trust is required to get its accounts audited, then the income tax return must be e-filed along with the Digital Signature of the Chartered Accountant who is responsible for carrying out the audit.
Charitable trust/institution whether registered as a public charitable trust or a society under the Act 1860 or as a company licensed under section 8 of the Indian Companies Act is required to file along with the Return of income in ITR-7, Audit Report in Form 10B.
Tax audit is compulsory, if turnover of trust who engages in business is exceeds 1crore. Tax Audit provisions is generally not applicable to trusts which do not carry on any business.
In order to be eligible for claiming exemption, under income tax it is essential that the income of the trust is applied to such objects. A charitable trust or institution will have to apply at least 85 % of the income to charitable purposes.
For taking tax benefits under income tax you must be registered as charitable trust. If you do not have registration than you should not file ITR-7 but in any case you File ITR-7 for Unregistered Trust, you might get a defective notice from income tax department and then eventually you will have to reply by filling ITR-5 for unregistered trust as an AOP.
Charitable or religious trusts are entitled to get exemption under section 11 and section 12, on fulfillment of certain conditions i.e. Trusts should be created wholly for charitable or religious purposes and applying their income to such purposes in India.