Tax treatment of Donation received by a Society having 12A
This query is : Resolved
01 June 2010
dear all,
one of my client is receiving voluantry donations from verious person as they are running medical colleges on cherity basis.
i want to know the tax treatment on the same and how the same will be shown in the Balance Sheet.
thanks in advance.
take care
one of my client is receiving voluantry donations from verious person as they are running medical colleges on cherity basis.
i want to know the tax treatment on the same and how the same will be shown in the Balance Sheet.
thanks in advance.
take care
02 June 2010
its a urgent case dosto...
26 July 2025
### ✅ Tax Treatment of Donation Received by a Society Registered under **Section 12A** (as of 01 June 2010)
---
### 📘 Background:
If a **charitable society** is registered under **Section 12A** of the Income Tax Act, 1961, it gets **exemption** on its income, provided:
* The income is applied towards **charitable purposes** (e.g., running medical colleges).
* Donations and other income are **used as per the objects** of the society.
---
## 🔍 Tax Treatment of Donations:
### 1. **Voluntary Donations (General Corpus)**
* **Tax-exempt** under Section **11**, if:
* Society has valid **12A registration**, and
* Donation is applied toward **charitable purposes**.
* These donations are treated as **"Income"**, but **exempt** under Section 11, **if 85% is applied** for charitable purposes during the year.
---
### 2. **Corpus Donations** (if specifically stated as such)
* If donor **specifically mentions** that the donation is for the **corpus** (permanent fund) of the trust/society:
* It is **fully exempt**, and
* Not considered part of the 85% application requirement under Section 11(1)(d).
➡ Must be **credited to the Balance Sheet** as **"Corpus Fund"** (not income).
---
## 🧾 Balance Sheet Presentation:
| Type of Donation | Accounting Treatment |
| -------------------------------- | -------------------------------------------------------------------------- |
| **Corpus donation** | Shown under **Liabilities** as **Corpus Fund** |
| **General (voluntary) donation** | Shown in **Income & Expenditure A/c** under income from donations |
| Application of funds | Expenses like education, salaries, infrastructure shown as **expenditure** |
---
## ⚠️ Compliance Needed:
1. Society must have valid **12A registration**.
2. Must also apply for **80G** to give tax benefit to donors (not required for exemption but helpful).
3. **Maintain books of accounts** and file **Form 10B** (audit report) if total income exceeds limit.
4. File **Income Tax Return in ITR-7**.
---
### ✅ Summary:
| Donation Type | Taxability | Disclosure |
| ------------------------------- | ------------------------------- | ------------------------------- |
| Voluntary (general) | Exempt u/s 11 if 85% is applied | Income side of I\&E account |
| Corpus (with donor’s direction) | Fully exempt under 11(1)(d) | Liability side as "Corpus Fund" |
---
Let me know if you want a sample journal entry or I\&E/Balance Sheet format for such a society.
---
### 📘 Background:
If a **charitable society** is registered under **Section 12A** of the Income Tax Act, 1961, it gets **exemption** on its income, provided:
* The income is applied towards **charitable purposes** (e.g., running medical colleges).
* Donations and other income are **used as per the objects** of the society.
---
## 🔍 Tax Treatment of Donations:
### 1. **Voluntary Donations (General Corpus)**
* **Tax-exempt** under Section **11**, if:
* Society has valid **12A registration**, and
* Donation is applied toward **charitable purposes**.
* These donations are treated as **"Income"**, but **exempt** under Section 11, **if 85% is applied** for charitable purposes during the year.
---
### 2. **Corpus Donations** (if specifically stated as such)
* If donor **specifically mentions** that the donation is for the **corpus** (permanent fund) of the trust/society:
* It is **fully exempt**, and
* Not considered part of the 85% application requirement under Section 11(1)(d).
➡ Must be **credited to the Balance Sheet** as **"Corpus Fund"** (not income).
---
## 🧾 Balance Sheet Presentation:
| Type of Donation | Accounting Treatment |
| -------------------------------- | -------------------------------------------------------------------------- |
| **Corpus donation** | Shown under **Liabilities** as **Corpus Fund** |
| **General (voluntary) donation** | Shown in **Income & Expenditure A/c** under income from donations |
| Application of funds | Expenses like education, salaries, infrastructure shown as **expenditure** |
---
## ⚠️ Compliance Needed:
1. Society must have valid **12A registration**.
2. Must also apply for **80G** to give tax benefit to donors (not required for exemption but helpful).
3. **Maintain books of accounts** and file **Form 10B** (audit report) if total income exceeds limit.
4. File **Income Tax Return in ITR-7**.
---
### ✅ Summary:
| Donation Type | Taxability | Disclosure |
| ------------------------------- | ------------------------------- | ------------------------------- |
| Voluntary (general) | Exempt u/s 11 if 85% is applied | Income side of I\&E account |
| Corpus (with donor’s direction) | Fully exempt under 11(1)(d) | Liability side as "Corpus Fund" |
---
Let me know if you want a sample journal entry or I\&E/Balance Sheet format for such a society.
26 July 2025
### ✅ Tax Treatment of Donation Received by a Society Registered under **Section 12A** (as of 01 June 2010)
---
### 📘 Background:
If a **charitable society** is registered under **Section 12A** of the Income Tax Act, 1961, it gets **exemption** on its income, provided:
* The income is applied towards **charitable purposes** (e.g., running medical colleges).
* Donations and other income are **used as per the objects** of the society.
---
## 🔍 Tax Treatment of Donations:
### 1. **Voluntary Donations (General Corpus)**
* **Tax-exempt** under Section **11**, if:
* Society has valid **12A registration**, and
* Donation is applied toward **charitable purposes**.
* These donations are treated as **"Income"**, but **exempt** under Section 11, **if 85% is applied** for charitable purposes during the year.
---
### 2. **Corpus Donations** (if specifically stated as such)
* If donor **specifically mentions** that the donation is for the **corpus** (permanent fund) of the trust/society:
* It is **fully exempt**, and
* Not considered part of the 85% application requirement under Section 11(1)(d).
➡ Must be **credited to the Balance Sheet** as **"Corpus Fund"** (not income).
---
## 🧾 Balance Sheet Presentation:
| Type of Donation | Accounting Treatment |
| -------------------------------- | -------------------------------------------------------------------------- |
| **Corpus donation** | Shown under **Liabilities** as **Corpus Fund** |
| **General (voluntary) donation** | Shown in **Income & Expenditure A/c** under income from donations |
| Application of funds | Expenses like education, salaries, infrastructure shown as **expenditure** |
---
## ⚠️ Compliance Needed:
1. Society must have valid **12A registration**.
2. Must also apply for **80G** to give tax benefit to donors (not required for exemption but helpful).
3. **Maintain books of accounts** and file **Form 10B** (audit report) if total income exceeds limit.
4. File **Income Tax Return in ITR-7**.
---
### ✅ Summary:
| Donation Type | Taxability | Disclosure |
| ------------------------------- | ------------------------------- | ------------------------------- |
| Voluntary (general) | Exempt u/s 11 if 85% is applied | Income side of I\&E account |
| Corpus (with donor’s direction) | Fully exempt under 11(1)(d) | Liability side as "Corpus Fund" |
---
Let me know if you want a sample journal entry or I\&E/Balance Sheet format for such a society.
---
### 📘 Background:
If a **charitable society** is registered under **Section 12A** of the Income Tax Act, 1961, it gets **exemption** on its income, provided:
* The income is applied towards **charitable purposes** (e.g., running medical colleges).
* Donations and other income are **used as per the objects** of the society.
---
## 🔍 Tax Treatment of Donations:
### 1. **Voluntary Donations (General Corpus)**
* **Tax-exempt** under Section **11**, if:
* Society has valid **12A registration**, and
* Donation is applied toward **charitable purposes**.
* These donations are treated as **"Income"**, but **exempt** under Section 11, **if 85% is applied** for charitable purposes during the year.
---
### 2. **Corpus Donations** (if specifically stated as such)
* If donor **specifically mentions** that the donation is for the **corpus** (permanent fund) of the trust/society:
* It is **fully exempt**, and
* Not considered part of the 85% application requirement under Section 11(1)(d).
➡ Must be **credited to the Balance Sheet** as **"Corpus Fund"** (not income).
---
## 🧾 Balance Sheet Presentation:
| Type of Donation | Accounting Treatment |
| -------------------------------- | -------------------------------------------------------------------------- |
| **Corpus donation** | Shown under **Liabilities** as **Corpus Fund** |
| **General (voluntary) donation** | Shown in **Income & Expenditure A/c** under income from donations |
| Application of funds | Expenses like education, salaries, infrastructure shown as **expenditure** |
---
## ⚠️ Compliance Needed:
1. Society must have valid **12A registration**.
2. Must also apply for **80G** to give tax benefit to donors (not required for exemption but helpful).
3. **Maintain books of accounts** and file **Form 10B** (audit report) if total income exceeds limit.
4. File **Income Tax Return in ITR-7**.
---
### ✅ Summary:
| Donation Type | Taxability | Disclosure |
| ------------------------------- | ------------------------------- | ------------------------------- |
| Voluntary (general) | Exempt u/s 11 if 85% is applied | Income side of I\&E account |
| Corpus (with donor’s direction) | Fully exempt under 11(1)(d) | Liability side as "Corpus Fund" |
---
Let me know if you want a sample journal entry or I\&E/Balance Sheet format for such a society.
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