Taxation of non registered trust under section 12aa
Vijaya Bhaskar
(Querist) 12 April 2014
This query is : Resolved
Dear Experts,
There is a trust which is established in the year 2012 (2012-13), until know it has not obtained registration under 12AA. However, it has raised General donation of Rs.300000. Specific fund Rs.100000 during the year 2012-13 and incurred expenses toward the objects Rs.120000. Now, (2014-15)the trustees want to obtain registration from the Income tax submitting audited financial statements and activities along with other documents.
Appreciate your valuable expertise for the following queries.
1. is the trust liable for tax, since it has not registered under 12A from Income tax?
2. if liable, on what amount and rate the trust needs to pay the tax?
3. is tax to be paid on both the donations general donation (Rs.300000)and specific donation (Rs.100000)?
4. if registration granted, will it be retrospectively?
Thanking you in advance
R.V.RAO
(Expert) 13 April 2014
A public Charitable Trust not registered would be chargeable to tax as an AOP (association of persons). Charitable trust ensuing benefit for specified categories of persons (author of trust or trustees etc.) would be subject to maximum marginal tax.
source:
http://www.linkedin.com/groups/Tax-Implication-Unregistered-Trust-u-47657.S.183151411 (sri k. anand)
on the basis of decision of Three Tribunals i.e. ITAT, Chennai, ITAT, Delhi and ITAT, Kolkata and further confirmed by the Delhi High Court, the voluntary contribution of corpus donation is in the nature of capital receipt and not taxable, irrespective of the fact whether trust is registered u/s 12AA or not.
source:
http://anilkumarjainca.blogspot.com/2013/08/corpus-donations-not-taxable-in.html
The total income of the AOP/BOI is taxable, either at the rates applicable to an individual, or at the maximum marginal rate or at a rate higher than maximum marginal rate.
The tax incidence on AOP/BOI depends upon whether or not the individual shares of members in the whole or in any part of the income of the AOP/BOI are determinate:-
Where shares of the members are determinate (under Section 67A)
The total income of an AOP/BOI wherein the shares of the members are determinate and known
The tax is chargeable on the total income of an AOP/BOI at the same rate as is applicable in the case of an individual.
But, when the total income of any member of the AOP/BOI for the previous year (excluding his share from the AOP/BOI) exceeds the maximum amount which is not chargeable to tax in the case of that member under the Finance Act of the relevant year, tax is charged on the total income of the AOP/BOI at the maximum marginal rate (i.e. the highest slab applicable to an individual).
And, where, the total income of any member of the AOB/BOI (whether or not it exceeds the maximum amount not chargeable to tax in the case of an individual) is chargeable to tax at a rate higher than the maximum marginal rate, tax shall be charged on that portion of the total income of the AOP/BOI which is relatable to such member at a higher rate and the balance of the total income of the AOP/BOI shall be taxed at the maximum marginal rate.
Where shares of members are indeterminate(under Section 167B)
The tax is charged on the total income of the AOP/BOI at the maximum marginal rate, which is the rate of tax (including surcharge, if any) applicable in relation to the highest slab of income in the case of an individual as specified in the Finance Act of the relevant year. However when any member is charged at a higher rate than maximum marginal rate, the income shall be taxed at a higher rate.
SOURCE:
http://business.gov.in/taxation/aop_boi.php
registration under sec 12 AA can be retrospective .
R.V.RAO
(Expert) 13 April 2014
repeated query.this was replied.
