As per Finance Act of 2023, donations made by a trust or institution are only recognized as applications for charitable or religious purposes up to 85% of the amount donated.
Reetu | Mar 7, 2024 |
CBDT clarifies provisions under Finance Act 2023 relating to Donations made by a Trust/ Institution to another Trust/ Institution
Income from any fund, institution, or trust, any university or other educational institution, or any hospital or other medical institution referred to in specified sub-clauses of section 10 (23C) of the Income-tax Act, 1961 (the ‘Act’), or any trust or institution registered under section 12AA/12AB of the Act, is exempt, subject to the fulfillment of certain conditions specified in various sections of the Act.
According to the Finance Act of 2023, donations made by a trust or institution (other than towards corpus) are only recognized as applications for charitable or religious purposes up to 85% of the amount donated.
The Central Board of Direct Taxes (CBDT) has received representations raising concerns about whether the remaining 15% of donations to other trusts or institutions would be taxable or are eligible for 15% accumulation, given that the funds would not be available because they had already been disbursed.
CBDT has examined the matter with reference to the issues raised above.
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