Financial Daily from THE HINDU group of publications
Saturday, Apr 13, 2002
Financial Daily from THE HINDU group of publications Saturday, Apr 13, 2002 |
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Industry & Economy
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Income Tax Ease I-T norms for charitable trusts: ICAI K.R. Srivats
NEW DELHI, April 12 THE Institute of Chartered Accountants of India (ICAI) has suggested that religious and charitable trusts be permitted to apply their income for religious and charitable purposes even during the financial year immediately following the financial year in which such an income is received. Such a flexibility, it is being perceived, will remove genuine hardship in cases where the income is earned or contribution is received by the trust during the "fag end'' of the financial year. Section 11 of the Income-Tax Act is proposed to be amended to stipulate that an income received by religious and charitable trusts can be excluded from `total income' and thereby exempted from income tax only if such an income is applied for religious and charitable purposes within the year of receipt. The income which has not been so used can, however, be accumulated for a maximum period of five years and still be excluded from `total income' of such trusts if certain conditions are met. In their post-Budget representation to the Finance Ministry, ICAI has also suggested that payments to other trusts and institutions, out of income from property held under trust, should be considered as application of income even if such payments are made in the financial year following the year in which the income was earned. "Extension of the period by one more year will provide the trusts with sufficient time to explore the possibility of application of their income. They can decide to contribute to other trusts in the event of their inability to identify avenues for application of income,'' an ICAI official said. As per the proposed changes to Section 11 of the Income-Tax Act, payment to other trusts and institutions in the year of receipt of income would continue to be treated as application of income. However, any payments out of accumulated income would not be treated as application of income and will be taxed. The total income of all categories of trusts in the country was more than Rs 15,000 crore during the financial year ended March 31, 2000.
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