Quick Summary
Several public charitable trusts in India have approached the Bombay High Court challenging the Income Tax Departments insistence that trust deeds must explicitly state that the trust is "irrevocable" to qualify for tax exemption registration. Professional bodies including the Chamber of Tax Consultants and the Bombay Chartered Accountants' Society, along with multiple charitable trusts, filed a writ petition on February 27 contesting the department's interpretation of the law. They argue that
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FAQ :
Charitable trusts are challenging the Income Tax Department's requirement that their trust deeds must explicitly state they are "irrevocable" to qualify for tax exemption registration.
The case is being heard by the Bombay High Court.
They argue that under the Income Tax Act 1961, a trust transfer is already considered irrevocable unless the settlor explicitly retains the power to revoke, meaning the absence of an irrevocability clause shouldn't prevent registration.
Amending long-standing trust deeds can be time-consuming and expensive, often requiring approvals from the Charity Commissioner and sometimes the courts.
Yes, many trusts that have operated for decades without such specific clauses fear that denial of registration could jeopardise their tax-exempt status.
The proposed new income tax framework, effective from April 1, 2026, does explicitly state that charitable trusts must be irrevocable. However, experts argue this should not be applied retrospectively to existing trusts under current law.
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