Taxation of charitable trust

Friends, I will be thankful for any answers on my query.

Assume that there is a Charitable Trust with due registration with all the authorities. Now, in three preceeding years in a row, the Trust has income of GROSS income of 15 / 18 / 21 lacs respectively. The trustees have under some mistaken belief, not spent any sum on the Objects of the Trust. At the same time, the Trust's income has been spent on other puroposes to the extent of 10 / 11 / 18 lacs respectively. The question is whether there will be tax liability because 15 / 18 / 21 lacs are NOT put to use for charitable purpose. If yes, how much exemption will be available u/s 11(1)(a)

Replies (1)

If you doesn't follow section 11 and 12. The Income is taxable at maximum marginal rate (MMR).

Tax calulation made on income after deducting amount utilised for its principal objectives (If fun used below 85%)

You can check this point ------ Trust can claim exemption even when it has not spent 85% of its income. If it sets apart the residual amount for the specific objects of the trust and passes a resolution to spend it in next 5 years. However the Copy of the resolution along with form No.10 shall be sent to the Assessing Officer before time specified u/s 139(1).

 

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