Share Donation Guidance for Trusts: Tax & Accounting

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This discussion provides guidance for Trusts receiving share donations. It clarifies that while shares can be accepted as a donation in kind, they must be disposed of within one year and proceeds reinvested according to Section 11(5). The guidance also addresses document requirements, 80G benefit eligibility (which is not allowed for share donations), accounting treatment, and the need for Form 10BD.

musabbir

musabbir (Querist)
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28 October 2022 We need some guidance from you that one of our donors wants to donate the shares to our Trust.Please answer below mentioned queries.

1) What documents to be taken from Donee?

2) Is it eligible for 80G benefits?-

3) How much time can we keep the shares in our Demat Account?-

4) What accounting effect should be given in books of Accounts?

5) Whether it comes under Donation in Kind?

6) Whether we need to file Form 10BD for the Same?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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28 October 2022 1 Tranfer deed.
2 Not allowed.
3 One year.
4 Account it as donation.
5 yes.
6 Not required as 80G benefit not available.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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28 October 2022 With reference to the investment in other shares, the trust has to dispose of the same as per the provisions of Section 13(1)(d) of Income-tax Act,1961. The trust though is not permitted to acquire these other shares but can receive any shares by way of donation from any person and in such a situation, the law allows the trust to receive the shares by way of donation but the same has to be disposed off within one year and the proceeds has to be invested as per the mode of investment allowed as per Section 11(5) of the Income-tax Act,1961.

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