Taxability of income of charitable institution/trust/fund

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 April 2016 There is a unit of Police Kendriya Kalyan Samiti in the name of M/s Police Kalyan Petrol Pump, The samiti has been earning income from petrol pump. I want to know the section which will be applicable to the samiti for exemption from income tax, i.e. whether section 10(23AA), 10(23AAA), or any other section would be applicable to the same.

Querist : Anonymous

Querist : Anonymous (Querist)

25 April 2016 Any views on this?
Need urgent help.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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26 July 2025 For income earned by a charitable institution or trust like **Police Kendriya Kalyan Samiti** from a petrol pump, the applicable tax exemption depends on the nature and registration status of the trust.

### Key Points:

1. **Section 10(23AA)**:

* Applies to **any fund or institution established by or under a Central, State, or Provincial Act** which is wholly or substantially financed by the government.
* Example: Certain government-run welfare funds.

2. **Section 10(23AAA)**:

* Applies to **any fund or institution created by the government or notified for public welfare**.
* This includes funds or institutions administered or controlled by the government.

3. **Section 11 & 12** (general exemption for charitable/religious trusts):

* Exemption applies to income applied or accumulated for charitable purposes if the trust is registered under **Section 12AA** of the Income Tax Act.
* Income from business activities is taxable unless it meets conditions under Section 11(4A) (business incidental to charitable purpose).

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### In your case:

* If **Police Kendriya Kalyan Samiti** is a **government-established or substantially government-financed entity**, **Section 10(23AA) or 10(23AAA)** may apply.

* However, if it is an independent **charitable trust registered under Section 12AA**, exemption would come under **Sections 11 & 12**.

* Income from running a petrol pump is generally **business income** and taxable unless the activity is incidental and the income is used for charitable purposes.

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### What to check:

* Is the Samiti **established by or under any government Act?**
* Is it **registered under Section 12AA**?
* Is the income from the petrol pump utilized for charitable purposes?

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If the Samiti is a **registered charitable trust** and the petrol pump income is incidental and applied to charitable objectives, it may be exempt under Sections 11 and 12.

Otherwise, government-established entities might rely on Section 10(23AA) or 10(23AAA).

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**Summary Table:**

| Scenario | Applicable Section |
| --------------------------------------------- | ---------------------------------------------- |
| Government-established & financed institution | Section 10(23AA) / 10(23AAA) |
| Registered charitable trust under 12AA | Sections 11 & 12 |
| Income from petrol pump (business income) | Taxable unless incidental & applied to charity |

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If you can share the registration details and how the income is used, I can help further!

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