Charitable trust
This query is : Resolved
13 December 2014
dear sirs
we are running a charitable trust . we have doing a business in the name of charitable trust and sales tax return also filed. the income from business is used for charitable purpose . the business has gross turnover of Rs.1.4 crore and net profit of 80000. is the business is liable for tax audit? which itr to be filled ? ITR 7 or ITR 4? audit report under section 44 ab and 10 b is required ? in computation how gross receipts of the trust to be shown? gross income of the trust & profit of the business to be shown in gross income ? please help me its very urgent
we are running a charitable trust . we have doing a business in the name of charitable trust and sales tax return also filed. the income from business is used for charitable purpose . the business has gross turnover of Rs.1.4 crore and net profit of 80000. is the business is liable for tax audit? which itr to be filled ? ITR 7 or ITR 4? audit report under section 44 ab and 10 b is required ? in computation how gross receipts of the trust to be shown? gross income of the trust & profit of the business to be shown in gross income ? please help me its very urgent
13 December 2014
Yes the business is liable for tax audit u/s 44ab.
Prior to Assessment Year 2009-10, business income of a charitable trust or institution was also eligible for exemption subject to conditions that such business should be incidental to the attainment of its objects, and that separate books of account are maintained for such business. With effect from 01.04.2009 (i.e., from assessment year 2009-10 onwards), however, the “advancement of any other object of general public utility” shall not qualify as a “charitable purpose” if the same involves the carrying on of any activity in the nature of trade, commerce or business, or rendering of any service in relation to any trade, commerce or business, for a consideration. This new restriction applies irrespective of the nature of use or application of the income arising from such activity. However, the rigour of this amendment has been reduced somewhat by a subsequent amendment brought in by the Finance Act, 2010 (with retrospective effect from 1-4-2009) to the effect that the said restriction shall not apply if the aggregate value of receipts from such activity during the given financial year does not exceed Rs. 10,00,000.
This ceiling stands revised upwards to Rs.25, 00,000 with effect from 01.04.2012.
Prior to Assessment Year 2009-10, business income of a charitable trust or institution was also eligible for exemption subject to conditions that such business should be incidental to the attainment of its objects, and that separate books of account are maintained for such business. With effect from 01.04.2009 (i.e., from assessment year 2009-10 onwards), however, the “advancement of any other object of general public utility” shall not qualify as a “charitable purpose” if the same involves the carrying on of any activity in the nature of trade, commerce or business, or rendering of any service in relation to any trade, commerce or business, for a consideration. This new restriction applies irrespective of the nature of use or application of the income arising from such activity. However, the rigour of this amendment has been reduced somewhat by a subsequent amendment brought in by the Finance Act, 2010 (with retrospective effect from 1-4-2009) to the effect that the said restriction shall not apply if the aggregate value of receipts from such activity during the given financial year does not exceed Rs. 10,00,000.
This ceiling stands revised upwards to Rs.25, 00,000 with effect from 01.04.2012.
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