Handbook on Charitable Trusts, NGOs, NPOs & Private Trusts Including Accounting & GST Aspects By CA Nisha Bhandari, CA Satyadev Purohit Edition 2023

Handbook on Charitable Trusts By CA Nisha Bhandari Edition 2023

Handbook on Charitable Trusts By CA Nisha Bhandari Edition 2023

Perhaps the most complicated subject under the Income Tax Law is taxation of charitable trusts and institutions. In recent past the law and procedure relating to taxation and registration of trusts and institutions has undergone several changes. The various conditions for availing of exemption under both regime i.e. under sections 11 to 13 and under clauses (iiiab) to (via) of section 10(23C) have been significantly changed. Therefore looking at the need of a comprehensive book on the subject incorporating the nature and impact of all recent amendments, the present book is prepared. This book in fact aims at providing a complete practice source book and can be used as a key for unlocking all legal and practical issues arising while dealing with Charitable Trusts and Institutions.

Trusts are generally of two kinds, namely, public trusts and private trusts. A public trust is one which is constituted for the benefit of either public at large or a considerable portion thereof answers such description. All charitable trusts are public trusts as a matter of fact so much so that public trusts and charitable trusts may even be said to be synonymous. Under the Income Tax Act, sections 11 to 13 provide for special treatment to Public Charitable Trusts. As far as a private trust is concerned, same is also not less important as it has in its fold quite a large segment of assessees under the Income Tax Act. In case of private trusts, the beneficial interest is vested absolutely in one or more individual(s) who are, or within a certain time, may definitely be ascertained. This is so even though their activities may still be controlled by the settlor via the medium of trust by settling on trust properties to be passed on for beneficial interest to the beneficiaries. Private trusts may further be classified as specific trusts, discretionary trusts, family trusts, business trusts, etc. Sections 161 to 167 of the Income Tax Act deal with the subject of private trust. Looking at the importance of the private trusts, the same has exhaustively been dealt with in the present Treatise. Further, the non-profit sector is increasingly gaining importance in India as of now as it supports and supplements the developmental work of government for the sake of common man, and does so much more efficiently and cost effectively than the government machinery itself. For this purpose NGOs are incorporated which may generally be in the form of a society, a trust, a company, a club, an association, an institution, or the like. This Treatise cannot be said to be complete if the subject of NGOs is not specifically included therein.

The provisions of sections 11 to 13 governing charitable trusts impose certain restrictions and conditions for availing of exemption from income tax. The government feels that such restrictions and conditions may hamper some of the imperative social objectives which matter most, hence it provides for total exemption to incomes of certain specified trusts, associations, institutions, funds, etc., through several sub-sections of section 10, the important ones being sub-sections (21), (23), (23A), (23B), (23C) and (24). The present book is a sincere attempt to cover all such provisions in significant detail, so as to provide justification to the title in hand.

The overall subject matter is accordingly divided into Nine Parts namely —

Part I : Introductory

Part II :Public Charitable Trusts or Institutions

Section A : Charitable Purpose,

Section B : Exemption to Charitable Trusts and Institutions,

Section C : Procedure for Registration of Charitable Trusts/ Institutions,

Section D : Computation of Income by Trusts/Institutions,

Section E : Forfeiture of Exemption,

Section F : Filing of Return and Taxation of Charitable Trusts,

Section G : Trust Deeds–Preparation and Samples,

Part III : Trusts, Funds, Educational and Medical Institutions Exempt Under Section 10(23C)

Section A : Exemption Under Clauses (iiiab) to (via) of Section 10(23C),

Section B : Procedural Aspects and Requirement of Various Provisos to Section 10(23C),

Section C : Taxation and Audit of Charitable, Educational and Medical Institutions,

Section D : Sample Draft Deeds,

Part IV : NGOs, Societies, Clubs, Etc.

Section A :NGOs, Societies, Clubs, Etc.–Introductory,

Section B : NGO as a Company

Section C : NGO as a Society

Section D : NGOs as Institutions Funds or Associations of Specific Nature,

Section E : NGO as a Club

Part V : Donations and Approval Under Section 80G

Part VI : Certain Provisions Common to Charitable Trusts/ Institutions/NGOs, Etc.

Part VII : Accounting by Trusts and Institutions

Part VIII : Private Trusts–Formation, Taxation and Planning

Section A : Statutory Provisions Governing Private Trusts,

Section B : Tax Planning Via Different Kinds of Private Trusts,

Section C : Private Trusts Taxation,

Section D : Deeds and Conveyancing

Part IX : GST Implications Vis-a-Vis Trusts, Etc.

Section A : Legal and Procedural Aspects,

Section B : GST on NGOs, Trusts, Societies

The amendments brought about by the Finance Act, 2023 have been incorporated in the Supplement appended in the book, so as to make the book useful in the present scanerio. Recently the CBDT has issued Circular No. 6/2023, dt. 24-5-2023 clarifying certain provisions relating to charitable and religious trusts. The same has also been incorporated in the Supplement.