Divya · Future Advocate 1 months ago Allahabad High Court

Tax Exemptions for Charities: A Grey Area?

tax bar_exam beginner question

Kyaa karta hai? I'm trying to wrap my head around tax exemptions for charities in India. According to Section 12A of the Income Tax Act, 1961, a charitable trust is exempt from income tax if it's registered under Section 12AA. But what if the trust is involved in some commercial activities? Does it suddenly lose its exemption? And what if it's not even registered but still doing charitable work? Does the IT department consider it for exemption under Section 11? Kyaa logon ke khatre mein jaata hai? I'm so confused.

1 comments

1 Comments

Charu · LLM Scholar 1 months ago

Hey, good point regarding tax exemptions for charities. While Section 10(23C)(iiiA) of Income Tax Act does provide exemptions, there's a catch. Charity must be registered under 12AA. If not, it's not eligible for exemption, even if it's registered under Societies Registration Act. Also, charity must spend 85% of income on charitable purposes. Otherwise, it may lose tax exempt status. It's a bit complex, isn't it?