In respect of a trust registered u/s 12A, suppose we have total receipts amounting to Rs.10,00,000 during the year out of which 8,00,000 has been applied to charitable objects. This results in excess accumulation of Rs.50000 (i.e. excess over 15% of 10,00,000). When we enter the receipts and expenditure in the ITR form, it itself computes excess accumulation of 50,000 and includes it in taxable income. Now this 50,000 needs to be reported in section 115BBI. However when we do so, in the total comutation, this 50,000 gets updated twice (one from the system calculated excess and other from schedule BBI) resulting in total taxaxle income of Rs.1,00,000. Although tax is being computated on Rs.50000 only as the other 50000 is getting exmpt being less than basic exemption limit but from the disclosure point, the taxable income compuation is not correct. Please suggest on how to resolve this issue.
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Taxability u/s 115BBI for accumulation exceeding 15% of receipts
The issue you're facing is due to the way the ITR form is designed. Here's a possible solution:
1. Report the excess accumulation of Rs. 50,000 in Section 115BBI.
2. In the "Taxable Income" column, manually adjust the figure to remove the double counting. You can do this by subtracting Rs. 50,000 from the total taxable income.
3. In the "Notes" section, provide an explanation for the adjustment, stating that the excess accumulation has been included in the taxable income computation, but should not be taxed twice.
Alternatively, you can also consider the following:
1. Consult with a chartered accountant or tax expert to review your ITR form and ensure accurate reporting.
2. Contact the Income Tax Department's helpline or consult with a tax officer to clarify the correct reporting procedure.
3. Consider filing a revised return (if eligible) to correct the disclosure.
Remember to maintain accurate records and documentation to support your reporting and adjustment.
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