Charitable Trust Doubt

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Nilesh Mehta (Querist)
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26 October 2023 I have following queries in respect of our section 8 company which is registered under 12A-

1. When a trust receives corpus funds, they enjoy tax exemption when these funds are invested in the manner prescribed by Section 11(5). However, what happens if the corpus funds are not invested as specified under Section 11(5)?
2.Can the trust utilise the corpus funds for charitable activities of the trust?
3.If the trust earns interest or dividends from these corpus funds, can they reinvest these earnings and claim an income tax deduction, or they must spend the interest or dividend directly on charitable activities of the trust (85%) ?
4.What is the tax treatment of capital gains in case of charitable trusts?
5.Can charitable trust invest corpus fund in equity shares or mutual fund?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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27 October 2023 1 It's taxable.
2 yes unless it's donated for a specific purpose.
3 Treat it as corpus fund and reinvest to claim exemption.
4 Apply for charitable purposes or make deposit in banks and claim exemption.
5 Not allowed.

Nilesh Mehta

Nilesh Mehta (Querist)
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30 October 2023 Thanks for your reply.
Can you please provide relevant section in support of point no 3. As I am not able to find any thing on this.

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