Trust

This query is : Resolved

CA.Ritu Agarwal (Querist)
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18 May 2016 Dear Sir.

Can a trust lend money to any needy person for interest and against security. whether interest Received is taxable..

Amol S Joglekar

Amol S Joglekar (Expert)
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18 May 2016 assuming that the trust under your query is Public.
Yes, it can do so subject to however...01.suitable powers are vested through trust deed and 02. permission is granted by Charity Commissioneer.
The interest so received is taxable.

CA.Ritu Agarwal

CA.Ritu Agarwal (Querist)
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18 May 2016 Who is charity Commissioner..

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Amol S Joglekar

Amol S Joglekar (Expert)
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18 May 2016 Charity Commissioneer is the person under whom the Trusts are registered.
Please follow the link.
http://mahacharity.gov.in/static_pages/aboutus.php
Every state has its Charity Commissioneers.

CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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18 May 2016 dear ritu, as per my opinion , a public charitble trust , can only do the work, which are covered under its main object . lending money on interst is not a charitable object hence , you will lose benfit u/s 11, as well as risk of cancellation of registration under section 12A. Moreover , charity commisioner has no role in income tax act. Neither every state has charity commisioner,. he is state authority and has no role income tax act. income and asseseement of public charitable trust are governed by section 11to 13 of income tax act. as per section 11, if the income of trust is spend on chariable object ,then the trust is eligible for exemption of income , hence the taxablity deos not depend on souce if income, but it depends on how it is spent. but if the trust does any activity, which is beyoud its object like lending money , than it will losse the status of chariable trust.

CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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18 May 2016 however trust can deposit the surplus money in bank deposit or any other mode prescribed u/s 11(5) and earn interest and spend the money on its main object

CA.Ritu Agarwal

CA.Ritu Agarwal (Querist)
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18 May 2016 SAY... A person wants to pursue higher education but dont have money.. He ask trust to lend some money for his education and he admits to refund after his education is over. and gets job.

another case... say a person wants money for his daugters marriage. he takesh from trust and agrees to refund slowly..

can trust undergo these activities

Amol S Joglekar

Amol S Joglekar (Expert)
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19 May 2016 Reliance trust (By Ambani) is doing such an activity, especially for the students going abroad.

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CA SUNIL K GARG

CA SUNIL K GARG (Expert)
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19 May 2016 donating money for student or money to needy for marriage is charitable, but giving the money on interst is not charitable. pls see the difference .