TRUST

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AMIT AGRAWAL (Querist)
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15 January 2011 I have CREATED A TRUST 7 YEAR BACK AND SINCE INCEPTION Trust has RECEIVED CORPUS DONATION FROM CHATITABLE TRUST REGISTRED U/S 12A APPR Rs. 18 LACS TILL THE F. Y. 2009.10. AND Trust APPLIED FOR REGISTRATION U/S 12A ON AUGUST 2010, NOW A.O WANT TO TAXES Rs. 18 LACS AS INCOME. PLEASE TELL ME WHAT IS THE TRAETEMENT Of THIS .

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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15 January 2011 The consequences in case the society/ trust or the institution does not avail the registration under the Income Tax Act are :

The income so received by way of voluntary contributions either to Corpus or otherwise shall be considered and the expenses so incurred shall be allowed to compute the taxable income.

The income so derived shall be assessed in the status of the Associations of persons. The taxability of this income is generally done at the maximum rates of tax.

The following benefits are lost in case of non registration of the society :

Setting apart up to 25% of the income so received during the year.

Accumulation of the funds even exceeding 25% of the income received for the specific purposes .

Losing the exemption of the voluntary contributions received towards the Corpus of the society.

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CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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15 January 2011 Please Note :
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Especially to my colleagues and students :
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1. Making trust is not a big matter.

2. It can be formed with just Rs. 5,000/- expenditure but it is a status symbol of highly earned people.

3. Since no tax is generally paid by the trusts hence it makes trustees careless about the trust registration, accounting, audit and other duties.

4. Very low fee is paid to the CAs hence they are also not so careful to remind the consequences to the trustees.

5. The effect of the above circumstances is that the Trusts itself lose trust among the people.

6. And this is one of the reason that now they face hardships while running its activities.

7. There are many chartiable trusts which have crores of FDs in their hand as corpus but useless for public.

8. This is one of the reason to tax the income of the trust if they fail to comply the provisions for which the Trust are created.

And

This is not the end of the discussion.

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R e g a r d s.

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