11/02/2014

Assessment of Charitable Trust

There is always a need to supplement the Governmental efforts in various areas of welfare measure. Such a need arises not only because of lack of resources at the command of the Government, but also because of wealth of local knowledge available with Non Governmental Organizations (NGOs), which can be fruitfully utilized for the benefit of the society. Thus, N.G.Os exist not only I developing countries, but also developed countries.
These N.G.Os. may exist as non-profit companies, associations or trusts. In fact, structure or management is not the essence of the N.G.Os. It is the objectives, which distinguish an NGO from a business organization. Tax laws of almost all countries provide tax breaks to religious or charitable N.G.Os in the form of exempting their incomes from tax and also by way of granting tax incentives to the donors, who donate moneys to such exempted institutions. Such tax breaks and incentives are also embedded in various provisions of the Income tax Act, 1961 (the Act).

While working as Director of Income Tax (Exemption), Delhi, it was felt by me that the Department has not made any effort to inform assesses or general public about tax provisions relating to religious or charitable trusts and institutions. No booklet has been published by the Directorate of Income-tax, (RSP&PR) in this regard. Due to heavy workload the Directorate of Exemption is not in a position to interact with trusts and institutions engaged in charitable activities. Therefore, there is considerable lack of awareness about law and procedures in the matter. Through this book, an attempt is sought to be made to reduce this deficiency. The book contains brief narration of the law and procedures.

The forms, to be used by the assesses in order to avail of the benefit of various provisions, are also compiled as annexes to the book. However, the book is not meant to be an exhaustive exposition of law. Therefore, in case of any doubt, the assesses may refer to the Act, Rules and the case law.


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