Taxation of private trust

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Hi, A private trust is created by will having corpus as shares of a private limited company, the beneficiaries are public charitable trusts. The private trust is receiving dividend income & bank interest. please let us know the taxation of the trust.

Replies (1)

he dividend of course is exempt in the hands of the trust.

For the non exempt income, First check whether the shares of the bebeficiaries are determinate.

if yes any net income, upto minimum not taxable will be exempt and the balance will be taxed at normal slabs.

If the bebficiaries share is not determinate, then any surplus over the miniumum chargeable to tax will be taxed at 30.9%

It would be better for the trust to get itself registered under section 12A since the beneficiaries are Public Charitable trusts. ( You may want to check the other objectives of the trust also)

If u get registered then no amount will be taxable if you distribute or use 85 % of gross income to the beneficiaries

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