Trust
This query is : Resolved
22 June 2009
Income Tax Impact on Minor Beneficiary Trust. Is the trust as to pay any tax and what will be the slab rate
22 June 2009
01. See the slab rates that would be applicable on trust is the slab rates applicable for individuals.
02. Yes Trust will be liable to pay tax if its income exceeds the max. income not chargeable to tax.
03. Benefit of Section 11 & 12 will be claimed if the trust is registered under section 12A of the income TAx Act
02. Yes Trust will be liable to pay tax if its income exceeds the max. income not chargeable to tax.
03. Benefit of Section 11 & 12 will be claimed if the trust is registered under section 12A of the income TAx Act
23 June 2009
But it seem the beneficiary trust is tax free trust since it is opened for the benefit of minor
02 August 2025
Regarding **Income Tax impact on a Trust for Minor Beneficiaries**, here’s a clear summary:
---
### 1. **Is the Trust liable to pay tax?**
* **Yes**, a trust is a separate taxable entity under Income Tax Act.
* The **income of the trust is taxable in its hands** unless exemptions apply.
### 2. **Tax rates applicable to the trust**
* For **minor beneficiary trusts**, the tax rates applicable are **generally as per slab rates for individuals**, not corporate rates.
* If the trust’s income exceeds the basic exemption limit, it is liable to pay tax accordingly.
### 3. **Is the trust exempt from tax because beneficiaries are minors?**
* The **fact that beneficiaries are minors does not automatically exempt the trust from tax**.
* However, if the trust is a **“minor’s trust”** created specifically for minor beneficiaries and it fulfills conditions under the Income Tax Act, it may be treated differently, but still taxable unless registered and complying with section 11 & 12 exemptions.
### 4. **Exemption under Section 11 & 12**
* The trust can claim exemption under **Sections 11 and 12** if:
* It is **registered under Section 12A/12AA** of the Income Tax Act.
* The income is applied for charitable or religious purposes as defined under these sections.
* Mere registration alone does not guarantee exemption; conditions regarding utilization of income must be met.
### 5. **If no registration under 12A/12AA**
* The trust’s income will be **fully taxable at slab rates applicable to individuals**.
* No exemption will be available.
---
### Summary
| Scenario | Tax Treatment |
| -------------------------------------------------------------------- | ---------------------------------------- |
| Trust for minor beneficiaries not registered under 12A | Taxable at individual slab rates |
| Trust registered under 12A and income applied for charitable purpose | Eligible for exemption under Sec 11 & 12 |
| Trust income below basic exemption limit | No tax liability |
---
If you want, I can also help with specific provisions applicable to minor’s trust or how to get 12A registration for claiming exemptions. Would you like that?
---
### 1. **Is the Trust liable to pay tax?**
* **Yes**, a trust is a separate taxable entity under Income Tax Act.
* The **income of the trust is taxable in its hands** unless exemptions apply.
### 2. **Tax rates applicable to the trust**
* For **minor beneficiary trusts**, the tax rates applicable are **generally as per slab rates for individuals**, not corporate rates.
* If the trust’s income exceeds the basic exemption limit, it is liable to pay tax accordingly.
### 3. **Is the trust exempt from tax because beneficiaries are minors?**
* The **fact that beneficiaries are minors does not automatically exempt the trust from tax**.
* However, if the trust is a **“minor’s trust”** created specifically for minor beneficiaries and it fulfills conditions under the Income Tax Act, it may be treated differently, but still taxable unless registered and complying with section 11 & 12 exemptions.
### 4. **Exemption under Section 11 & 12**
* The trust can claim exemption under **Sections 11 and 12** if:
* It is **registered under Section 12A/12AA** of the Income Tax Act.
* The income is applied for charitable or religious purposes as defined under these sections.
* Mere registration alone does not guarantee exemption; conditions regarding utilization of income must be met.
### 5. **If no registration under 12A/12AA**
* The trust’s income will be **fully taxable at slab rates applicable to individuals**.
* No exemption will be available.
---
### Summary
| Scenario | Tax Treatment |
| -------------------------------------------------------------------- | ---------------------------------------- |
| Trust for minor beneficiaries not registered under 12A | Taxable at individual slab rates |
| Trust registered under 12A and income applied for charitable purpose | Eligible for exemption under Sec 11 & 12 |
| Trust income below basic exemption limit | No tax liability |
---
If you want, I can also help with specific provisions applicable to minor’s trust or how to get 12A registration for claiming exemptions. Would you like that?
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