Applicability of 115BBI on Surplus Income

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This discussion concerns a religious trust registered under Section 12, which received donations and interest income totalling Rs 12,25,000. After applying funds, a surplus of Rs 6,91,250 remains. The trust typically offers this surplus for tax without filing Forms 9A or 10, previously paying tax at slab rates. However, the introduction of Section 115BBI by the Finance Bill 2022 imposes a 30% tax on excess accumulations not covered by these forms, raising the question of whether the surplus should be taxed under this new section or at the usual slab rates.

nirav poptani

nirav poptani (Querist)
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30 October 2023 Dear Sir/Madam,

Religious trust is registered under section 12 with the income tax department. The details are as under:

Voluntary Donation Received Rs 5,00,000
Bank Interest FD and SB interest Rs 7,25,000
Total Rs 12,25,000

Application of Fund:
1. Rs 1,83,750 - 15% (Rs 12,25,000 lakhs X15%)
2. Rs 3,50,000 for trust object
Balance Rs 6,91,250

Now the trust is filling the return and the system is charging Tat u/s 115BBI at 30% tax on total Surplus income ie 6,91,250/-.

Generally, The trust does not file Form 9A or Form 10 for any reason and always offers the surplus income arising during the PY for tax. Thus as per my understanding, the definition of Specified Income should not be applicable in our case.

Till the last AY, the Trust used to pay tax as per the slab rates.

My question is whether such surplus income shall be taxed normal tax slab or at 30% u/s 115BBI.

Please suggest

Thanks

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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30 October 2023 The Finance Bill 2022 has inserted a new section 115BBI to tax the following income of charitable organisations at 30% tax rate: • If accumulation is made in excess of 15% of total income without filing Form 9A or Form 10 then such excess accumulation.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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30 October 2023 The due date of filing the form and for depositing the accumulated amount per 11(5) is also amended to 'at least 2 months prior to the due date of filing income tax return under 139(1)'.

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