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Tax implications for the beneficiary for the financial help received by him

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Dr.Jyothish Vijay

216 Points Posted on 26 October 2019

The question is whether someone should pay taxes for the financial help I receive?

for eg:

1) When relatives or friends or neighbours or political parties or even localities pool on money for the purpose of treatment of a needy or for helping him construct his house (damaged during natural calamities), should the receiver pay tax?

2)When non governmental bodies like charitable organizations or welfare bodies or professional bodies contribute amongst themselves as part of some schemes in the event of death of a member... Is that amount taxable at the hand of the beneficiary? Eg: There are associations like Coir farmer's association. They run schemes for their members wherein payment is given upon death of a member to his nominees IMA (indian Medical Association) runs similar social security schemes... What about them?

Do they have exemption under section 10 of IT act ?(akin to life insurance policies)

Replies (1)

Kapadia Pravin

17264 Points Posted on 27 October 2019

If such philanthropic trusts, NGO s Government Bodies , Trusts (provided they are registered under Income Tax Act ). They receive money called donations and not gift. The Donor may also get Deduction under 80G.

And when they spend it is called money spent on objects of such entities and hence not taxable subject to tax Provisions.

The taxation of the charitable trust etc is governed by the chapter III of the income tax which includes section 11, 12, 12A, 12AA and 13. The Government of India has given various exemptions to charitable and religious trust keeping in view of the services they render to the nation.