Registration of Charitable Trust Video Lecture | Income Tax for assessment (Inter Level) - Taxation

Ans. To register a charitable trust for taxation purposes, you need to follow these steps: 1. Prepare the necessary documents, such as the trust deed, which should include details about the aims and objectives of the trust. 2. Obtain a Permanent Account Number (PAN) for the trust from the Income Tax Department. 3. Fill out the application form for registration of the trust under Section 12A of the Income Tax Act. 4. Submit the completed application form, along with the required documents, to the Commissioner of Income Tax. 5. The Commissioner will review the application and may request additional information or documents if necessary. 6. Once approved, the trust will receive a registration certificate under Section 12A, which will make it eligible for tax exemptions.

Ans. Registered charitable trusts enjoy several tax benefits, including: 1. Exemption from income tax: Income earned by the trust, such as donations, investments, or interest, is exempt from income tax. 2. Deduction for donors: Donors who contribute to registered charitable trusts can claim a deduction under Section 80G of the Income Tax Act. 3. Exemption on capital gains: If the trust sells any assets and earns capital gains, those gains can be exempt from tax if used for charitable purposes. 4. Accumulation of income: Registered trusts can accumulate income for a maximum period of five years without any tax liability. 5. Exemption on foreign contributions: Charitable trusts registered under the Foreign Contribution Regulation Act (FCRA) can receive foreign contributions without attracting tax.

Ans. No, a charitable trust must be registered under the appropriate state law before it can be registered for taxation purposes. The trust deed, which outlines the objectives and operations of the trust, should comply with the state's Trusts Act or any other relevant legislation. Without proper registration as a trust, it would not be eligible for tax benefits or exemptions provided to charitable organizations.

Ans. There is no specific deadline for registering a charitable trust for taxation purposes. However, it is advisable to apply for registration soon after the trust is formed to ensure that tax benefits can be availed from the beginning. It may take some time for the registration process to be completed, as the application will be reviewed by the Commissioner of Income Tax. Therefore, it is recommended to initiate the registration process as early as possible.

Ans. Yes, a charitable trust that primarily operates outside of India can still be registered for taxation purposes in India if it meets certain criteria. The trust should be registered under the Foreign Contribution Regulation Act (FCRA) and comply with the provisions of the Income Tax Act. It should also maintain proper records and submit annual financial statements to the relevant tax authorities. By fulfilling these requirements, the trust can avail tax benefits and exemptions provided to charitable organizations operating in India, even if their activities are primarily conducted overseas.