Taxability u/s 115BBI for accumulation exceeding 15% of receipts

436 views

Save Share

Sagar Joshi

23 Points Posted on 25 October 2024

In respect of a trust registered u/s 12A, suppose we have total receipts amounting to Rs.10,00,000 during the year out of which 8,00,000 has been applied to charitable objects. This results in excess accumulation of Rs.50000 (i.e. excess over 15% of 10,00,000). When we enter the receipts and expenditure in the ITR form, it itself computes excess accumulation of 50,000 and includes it in taxable income. Now this 50,000 needs to be reported in section 115BBI. However when we do so, in the total comutation, this 50,000 gets updated twice (one from the system calculated excess and other from schedule BBI) resulting in total taxaxle income of Rs.1,00,000. Although tax is being computated on Rs.50000 only as the other 50000 is getting exmpt being less than basic exemption limit but from the disclosure point, the taxable income compuation is not correct. Please suggest on how to resolve this issue.

Replies (3)

Quick Summary

This discussion addresses an issue where excess accumulation of trust funds over 15% of receipts is being double-counted in the Income Tax Return (ITR) form when reported under Section 115BBI. The user is experiencing an incorrect taxable income computation due to this duplication. Solutions proposed include manually adjusting the taxable income figure in the ITR, providing explanations in the notes section, or seeking professional advice from a chartered accountant or the Income Tax Department.

Rama chary Rachakonda

Master in Accounts & high court Advocate

7021 Points Posted on 25 October 2024

The issue you're facing is due to the way the ITR form is designed. Here's a possible solution:

1. Report the excess accumulation of Rs. 50,000 in Section 115BBI.

2. In the "Taxable Income" column, manually adjust the figure to remove the double counting. You can do this by subtracting Rs. 50,000 from the total taxable income.

3. In the "Notes" section, provide an explanation for the adjustment, stating that the excess accumulation has been included in the taxable income computation, but should not be taxed twice.

Alternatively, you can also consider the following:

1. Consult with a chartered accountant or tax expert to review your ITR form and ensure accurate reporting.

2. Contact the Income Tax Department's helpline or consult with a tax officer to clarify the correct reporting procedure.

3. Consider filing a revised return (if eligible) to correct the disclosure.

Remember to maintain accurate records and documentation to support your reporting and adjustment.

monojit sharma

67 Points Posted on 02 November 2024

Have you submitted Form 10 ?

Have your problem solved ?

if still facing problem, you can mail me : taxfriendlyburdwan @ gmail.com
for further assistance

Aashok Kumar Sharma

Finance/Compliance Consultant

77731 Points Posted on 08 November 2026

Sec 115BBI for a 12A trust:
• Sec 115BBI (from AY 2023-24) taxes certain "specified income" of trusts at 30%: income accumulated beyond 15% not applied per Sec 11(2) conditions; income deemed under 11(3) (accumulated but not used within 5 years); income of trusts not applied or accumulated per conditions; and income applied in violation of 13(1)(c) (benefit to specified persons).
• If total receipts are Rs 10 lakh and the trust applies 85% (Rs 8.5 lakh), the 15% (Rs 1.5 lakh) accumulation is allowed without conditions. No tax.
• If it applies less than 85% and doesn't use Form 10 (11(2)) or Form 9A, the shortfall is taxable under 115BBI at 30%.