Religious And Charitable Trusts In India
social welfare is the basic resposibility of government. Charitable and Religious Trusts lessen this burden. Therefor, tax concessions are offered. Income applied for predefined and declared charitable object is exempt from income tax. Wealth tax is also not charged on properties held. If eligible, donor are also given deduction from income tax u/s 80G or section 80GGA. Skillful and Intelligent tax planner tends to use trust for evasion of taxes. This result in a plethora of regulatory measures. Consequently, the legislation has become confused and complicated. More so because the term like 'income', 'capital', 'capitalgains', 'donations', etc., used innormal tax parlance or even in ordinary parlance have entirely different meanings and connotations in the case of trusts.
Following are few instances:-
- Normally, gifts are capital receipt and not charged to tax either in the hands of the donor or the donee. However, donations to trusts are their income.
- The income of trusts is real income. Normal statutory deduction and rebates are not available to trusts.
- Profit & Loss is meaningless. A charitable trust is not expected to earn any profit. Tax is based on Income & Expenditure.
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