Trust

Tax queries 106 views 6 replies
1.What is the reason to prepare receipts and payments of trust while finalising books of accounts of trust?
2.What is the basis of selecting extent of vouching of trusts? Is there is any provision in the IT Act to select this basis?
3. Do you think it is right to show fixed deposits in receipts and payments?
Replies (6)
1) in case of a trust registered under 12AA , claiming exemption under 11&12, there is no need to classify the income and expenditure, into capital and revenue, what ever income we receive we should apply it for the objects of the trust, any amount unspent beyond 15% alone taxable...that's the reason we prepare receipts and payments, where we can know the cash flows during the year...other reason might be the concept of heads of income is not applicable for trusts registered under 12AA....
2) no such provision exists in income tax act
3) Fixed deposits if they were invested in accordance with section 11(5), they will be exempted, so hence will come in receipts and payments
I didn't understand your third point.
I mean making fixed deposit is outflow and hence it will come in receipts and payment but for income tax it is allowed only if it is covered in sec- 11(5)..
Oh. Sorry. But I wanted to know your opinion about showing opening and closing balance of FDs in receipts and payments A/c.


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