My query is in respect of donations received by a trust registered u/s 12AA which specifically forms part of its corpus. If the donor directs that his donation should form part of the corpus of the trust, the same is excluded from taxation. In other words, it is not treated as "income" of the trust. A a donor donates Rs 5 lakhs towards corpus of a trust. Trust receives the donation and accounts the receipt as a "capital receipt" and credits the same to "corpus fund" account in the balancesheet.
My question are :
1. For what purpose this corpus fund can be used?
2. Can this corpus fund used to charitable purposes towards meeting its objects?
3. Should the money received forming part of corpus be invested in deposit or approved securities?
4. If the trust spends this corpus fund towards charitable purpose, can it claim credit in 85% limit?
Please clarify
CA P Giridhar
9886735130
peravali.giridhar @ gmail.com
CAclubindia
