.jpg)
A charitable trust in India is an irrecoverable trust established for a charitable motive. It is a type of entity set up to provide the public with religious or humanitarian facilities. Trusts are established for charitable or religious purposes and are granting various benefits under the income tax act.
 Trust, Society, and Section 8 companies can take registration under u/s 12A to claim an exemption under Income Tax Act if certain conditions are satisfied. Section 12AA deals with the procedure for registration of a trust.
Every Charitable Trust register, shall, if their total income before exemption under section 11 of the income tax act and sec 12 of income tax act (section 11 and 12 of income tax act) exceeds the maximum amount which is not chargeable to income tax, furnish a return of such income of the previous year.
Filing of Income Tax Return for NGO
Every Public Charitable trust whose total income under sections 11 & 12 before exemption exceeds the maximum amount, which is not chargeable to income tax, must furnish a return of such income of the previous year.
Due dates for Filing of return
The due date for a charitable trust who is required to get its accounts audited under the income tax act is 30th September of the assessment year.
If a charitable trust is required to furnish their report in Form No. 3CEB under section 92E, then the due date of filing is 30th November of the assessment year.
& if the trust does not need to get his account audited, the due date will be 31st July of the assessment year.
Taxation of Trust
Income up to Rs. 2.5 lakh is exempt and you do not need to pay tax on it. The provision related to the taxability of charitable trust has been categorized in the following table;
| S. No. | Cases | Charitable Trust Income tax slab rate |
| 1. | Income of trust for which an exemption is not available under the Act. | The income of the trust, taxed using the following slab-rate: Trust Income Tax Rates: Upto Rs. 2.5 lakhs – no tax rate is required to be paid.Rs. 2.5 lakhs – Rs. 5 lakhs – 5% Above Rs. 10 lakhs- Rs. 112500+ 30%  Surcharge: If in case income is more than 50 lakhs, then the surcharge will be 10% of income tax. If income is more than Rs. 1 crore, the surcharge will be 15% of income tax. If income is more than Rs. 2 crores, a surcharge will be 25% of income tax. If income is more than Rs. 5 crores, a surcharge will be 37% of income tax.  Cess : 4% of (Income Tax + surcharge)      |
| 2. | If in case of trust has surrendered its status, on account of violating the conditions recommended by the act. | In this case, trust should pay tax on the maximum marginal rate. That rate is 42.744%. This rate is applicable only on that part of income that can be assigned to the forfeiture of the charitable trust. |
| 3. | If the trust has converted itself into a non-charitable trust. | The marginal rate of 42.744% should be accreted income. |
Note: - Accreted income is the amount of aggregated fair market value of total assets as reduced by the total liabilities.
How to file Income Tax Return of a Charitable Trust
The ITR of trusts must be filed using Form ITR 5 or ITR 7.
The case where to file ITR 5
If the charitable trust is required to file an ITR due to taxable income being in excess of the basic exemption limit, then trusts needs to file ITR-5.
The case where to file ITR 7
If the charitable trust is required to file an ITR mandatorily under section 139(4A) or 139(4B) or 139(4D) or 139(4E) or 139(4F) of the income tax act, then trusts needs to file ITR-7.
Note: It is necessary for all charitable trust to E-file income tax return. Where the trust is needed to get its account audited, then the income tax return must be e-filed along with the Digital Signature of the Chartered Accountant who is liable for carrying out audit.
Penalty for delay in furnishing ITR
If Charitable Trust will not file their ITR on time, they have to pay a penalty of a sum of Rs. 100 per day till the date failure continues.
Point to remember
Entities that are registered under section 12AA (sec 12aa of income tax act) are required to file their return of income within the time allowed under section 139 of the act.
Conclusion
Income tax filing of section 8 companies or charitable trusts is different from the normal tax filing, where many things are needed to be taken care of for avoiding any kind of income tax notices in the future. So filing ITR of Trusts might get difficult for you and you need expert assistance for it, You Do not need to worry, as our experts on the team are always ready for your help.
You just need to contact us on 9193555055 or you can visit www.taxadvisory.in and submit your all required documents. Further team of Tax Advisory will take care of everything.
It enables a taxpayer to file an audit report if the taxpayer has applied for or is already registered as a trust or religious trust/ institution by Filing Form 10B.
In section 11(2), the NGO is required to accumulate or set apart income for the future application, where 85% of the income is not applied for charitable purposes.
If there is a surplus of the Charitable entities, it should be invested as per the modes prescribed under section 11(5) of Income tax act.
Section 10(23c) of income tax act is a specific exemption available to certain Government and non-government universities and educational institutions.
Is it mandatory to e-file return of trust?
Yes, it is mandatory for a trust to file its return of income electronically with or without a digital signature.Â
Which form is applicable for seeking registration under the Income Tax Act?
Form No. 10A should be used for application for registration by the NGO or charitable institution.
What are the trust income tax rates?
A charitable trust is chargeable to tax as per the slab rates which are applicable to an individual and not being a senior citizen or super senior citizen.
.jpg)
.jpg)
.jpg)
