24 June 2016
Application for registration of public charitable trust under section 12A and 80G to be made within one year of its creation. It may so happen that after application with exemption department of income tax but before getting registration certificate, trust starts getting donations and apply for the purposes for which it was established. Now my question is whether trust will get the exemption from tax and donor will get benefit u/s. 80G for all donation which are received prior to getting registration certificate from income tax department (exemption)
24 June 2016
NO, when deptt isssue 80G yo you then its mention the date of eligiblity for this certificate, donor then claim 80G otherwise not allowed.
25 June 2016
Thanks Mr. Rupesh And what about trust, will trust get the exemption for the amount its receives prior to date of registration and utilises for the purpose as per the provisions of income tax act.
10 August 2024
For a public charitable trust, the Income Tax Act in India provides certain provisions and exemptions regarding donations and funds received before the formal registration of the trust. Here’s a detailed explanation:
### **1. **Exemption for Amount Received Before Registration
**Trust Registration and Exemption:** - Generally, for a trust to claim exemptions under sections such as 11, 12, and 13 of the Income Tax Act, it needs to be registered with the Income Tax Department under Section 12A or 12AA. Registration provides the trust with eligibility for tax exemptions on income used for charitable or religious purposes.
**Amount Received Prior to Registration:** - **Not Automatically Exempt:** Amounts received by a trust before its registration will not automatically qualify for tax exemptions under Section 11 or 12, even if the funds are used for charitable purposes. The exemption typically applies to income earned after the trust’s registration.
- **Possibility of Claiming Exemption:** - **Retrospective Registration:** If a trust gets registered under Section 12A or 12AA, it may be possible to claim exemptions for donations received before registration, but this requires explicit provisions in the Act and careful documentation. You should consult the Income Tax Department or a professional to understand if retrospective registration could be applied and if any specific conditions must be met. - **Utilization for Charitable Purpose:** While the trust may not get automatic exemption for amounts received before registration, demonstrating that such funds were utilized for charitable purposes can be beneficial. This may affect the trust’s compliance and eligibility for exemption on future income and donations.
### **2. **Handling of Amounts Received Prior to Registration
**Accounting and Reporting:** - **Record Keeping:** Maintain detailed records of all funds received and utilized before the trust’s registration. This includes documentation of how the funds were used for charitable purposes.
- **Disclosure:** When applying for registration, disclose the details of amounts received before registration and their usage. This transparency helps in the registration process and provides clarity to the Income Tax Department.
**Consultation with Experts:** - **Professional Advice:** Consult a tax advisor or legal professional specializing in charitable trusts. They can provide specific guidance based on your situation, including whether any exemptions or retrospective benefits are possible.
### **3. **Further Steps After Registration
**Compliance with Section 11 and 12:** - **Income Exemption:** After registration, ensure compliance with the provisions under Section 11 and 12 for claiming exemptions. This involves proper documentation of income and expenditure related to charitable activities.
- **Filing Returns:** File annual returns and provide detailed information about income, expenditures, and compliance with charitable purposes as required by the Income Tax Act.
### **Conclusion**
In summary, a public charitable trust generally cannot claim exemptions for amounts received before its formal registration. However, proper documentation and consultation with tax professionals can help manage and potentially influence future compliance and exemptions. For specific scenarios and to ensure proper handling, especially if there are large amounts involved, seeking expert advice is strongly recommended.
CAclubindia
