LIVE GST Certification Course by CA Arun Chhajer begins 21st April. Register Now!!

Tds provisions - charitable trust

CA J.Alamelu lakshmi (Chartered Accountant) (852 Points)

24 December 2012

Whether a Charitable Trust is required to deduct from payment to contractors who are engaged in construction of church(extension of the existing premises) ?

Reply
Follow
Share

10 Replies

Rikin (Learner) (140 Points)
Replied 24 December 2012

Yes...Trust has to deduct TDS u/s 194C...if limit exceeds.

CA Gaurav Ajit Potdar (Chartered Accountant) (846 Points)
Replied 24 December 2012

Agreed with Rikin

CA J.Alamelu lakshmi (Chartered Accountant) (852 Points)
Replied 25 December 2012

What are the consequences in case of non-deduction?

CA Gaurav Ajit Potdar (Chartered Accountant) (846 Points)
Replied 25 December 2012

In case of non deduction you will be liable to pay interest & penalty,and the expenditure can also be disallowed if tds is not paid within due date for filling of income tax return.

CA J.Alamelu lakshmi (Chartered Accountant) (852 Points)
Replied 25 December 2012

But for disallowing the amount u/s 40(a)(ia) the assessee should be having business income which is not there in the present case.

CA Gaurav Ajit Potdar (Chartered Accountant) (846 Points)
Replied 25 December 2012

We deduct TDS because there is income in the hands of the contractors.

CA Pramod Jain (manager finance) (1577 Points)
Replied 25 December 2012

disallowance can be made for non-tds deduction and the same can be taxed as well

CA J.Alamelu lakshmi (Chartered Accountant) (852 Points)
Replied 25 December 2012

But I dont understand why disallowance ll be possible coz the assessee is not having income under PGBP to get disallowed u/s 40(a)(ia).

I thought only penal provisions would be applicable u/s 271C.

V Vara Prasad (Chartered Accountant) (212 Points)
Replied 17 January 2013

Section 40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head “Profits and gains of business or profession

Here Sec. 40(a) (ia) speaks about the disallowance of expenditure incurred u/s 30-38

So Under which the expenditure is claimed by the charirable trust is to be considered

If it does not belong to those sections then no disallowance

Only penal and interest provisions applicable

CA GURWINDER SINGH (PRACTICE) (22 Points)
Replied 07 May 2014

I disagree with the opinion that disallowances u/s 40(a)(i) would be made. if the trust is registered under section 12AA and is claiming exemption u/s 11 & 12, then no disallowance can be made because calculation of income of trust is governed by sec 11, 12 & 13. Secion 28 to sec 44 does not apply to trust as there is no business income.

Only when trust defy the provisions of section 11, 12 & 13, it is possible to calculate the income of trust under business income.

However, penalty & interest for non-deduction and deposit would be applicable to trust.