Under the existing Income Tax Law, charitable trusts and specified institutions are exempted from income tax in respect of income derived from property held for charitable, religious purposes.
Under the existing Income Tax Law, charitable trusts and specified institutions are exempted from income tax in respect of income derived from property held for charitable, religious purposes. The exemption registration is valid for an indefinite period without any requirement of renewal unless canceled by the authority in case of any default.
To streamline the application, registration process and ensure that the conditions of approval or registration are followed by such charitable trusts and specified institutions, the Union Budget 2020 proposed the changes such as (a) electronic registration of charitable trusts and specified institutions instead of manual documentation; (b) new application for an approval of registration shall be provisionally approved for three years based on the application without detailed enquiry; and (c) approval, registration or notification for an exemption shall be for a limited period of five years at one time.
Current Scenario
The charitable trusts & specified institutions involved in the activities such as charitable or religious purposes and registered under Sections 12A or 12AA of the Income Tax Act, 1961 are exempted under income is tax to an extent such income is utilized for the specified purpose.
Any person donating any amount to such charitable trusts & specified institutions are eligible to receive a specified deduction against their taxable income under Section 80G of the Income Tax Act 1961. The charitable trusts & specified institutions do not require to make any separate reporting to match the donation which claimed by donor.
The educational institutions, universities, hospitals, other medical institutions are eligible for 100% income tax exemption Section 10(23C) of the Income Tax Act 1961. The specified companies may claim the deduction vary from 125 percent to 200 percent in respect of scientific expenditure under Section 35 of the Income Tax Act 1961.
The Union Budget 2020 proposed the following changes with effect from 1st June’ 2020:
Conclusion
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