Capital Gain - Charitable Trust
This query is : Resolved
Quick Summary
26 August 2020
One Charitable trust has earned Capital Gain on sale on land held as Capital Asset.
Can the trust avail benefit of Section 54EC by investing in bonds prescribed.
Further, can the Capital Gain Tax be avoided if the entire gain is invested (85% criteria for trust) for charitable activities during the year.
If any other better option is there, please suggest.
Regards.
Can the trust avail benefit of Section 54EC by investing in bonds prescribed.
Further, can the Capital Gain Tax be avoided if the entire gain is invested (85% criteria for trust) for charitable activities during the year.
If any other better option is there, please suggest.
Regards.
26 August 2020
The Capital Gain Tax can be avoided if the entire sale consideration is invested (85% criteria for trust) for charitable activities during the year.
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26 August 2020
Apart from 85% conditon, is a trust eligible for claiming benefit u/s 54EC.
As section 54EC says that it is "eiligible to all assessee including a company"
As section 54EC says that it is "eiligible to all assessee including a company"
26 August 2020
54EC not applicable for charitable trust. Bank deposit or buying another property accepted.
27 August 2020
(1) 54EC can be availed by trust because
* bonds specified therein is a capital asset per 2(14) and
* by depositing in the said bonds, trust satisfies 11(1A) (a)(i)/(ii).
Ps:- If net consideration is used for 54EC, full exemption, otherwise partial and the remaining capital gains forms income derived from property for 11(1)(a).
(2) 85 % criteria is applicable for capital gains if net sale consideration is not fully utilized for acquiring another capital asset.
* bonds specified therein is a capital asset per 2(14) and
* by depositing in the said bonds, trust satisfies 11(1A) (a)(i)/(ii).
Ps:- If net consideration is used for 54EC, full exemption, otherwise partial and the remaining capital gains forms income derived from property for 11(1)(a).
(2) 85 % criteria is applicable for capital gains if net sale consideration is not fully utilized for acquiring another capital asset.
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