Trust Tax solution by the Tax Expert in Udaipur

Discover the tax implications for educational societies and trusts on our comprehensive website explained by the leading chartered accountants in Udaipur

An Society or Educational Trust registered with the sole objective for imparting education and do not do  any work for profit, then it gets the benefit of exemption from tax under Section 10 (23C) in some cases.

An educational institution gets exemption from tax in the following cases:-

  1. Category 1 who receives full financial assistance from Government :-

The entire income of these educational institutions is completely exempt from tax under section 10(23C)(iiiab).

  • Category 2 whose total receipts in  a FY is less than Rs. 5.00 Crore

The entire income of these institutions is also completely exempt from tax under section 10(23C)(iiiad).

  • Category 3 who does not fall in above two category:-

Under this category income is exempt from tax under section 10(23C)(vi) subject fulfillment of conditions as under :-

  1. The society should be approved by the Chief Commissioner or Director General of   Income Tax. Application for approval has to be made in Form 56D.
  2. The accounts must be get audited from the Chartered Accountants, if income in the financial is more than Rs. 2.50 Lacs  
  3.  By the 30 September, Audit report of the Society will have to be submitted in Form 10BB. .

4. Exemption under Section 11

If a society does not fall in the above three categories then the society can get the  exemption under Section 11 subject to satisfaction of following conditions:- .

  1. The society should be registered under Section 12AB of the Income Tax Act. So far as registration is concerned, The trust must make an application for registration  Form 10A/10AB.
    1. If the income of the society is more than Rs 2.50 lakh then it has to get its accounts     audited and submit the audit report in Form 10B to the department.
      1. The surplus funds of the society have to be invested under the provisions of section 11(5).

Mandatory return filing:-

  1. Societies intend avail exemption under Section 10(23C)(iiiad) and Section 10(23C)(vi) are required to file  Income Tax Return in form ITR-7 if their income is more than Rs 2.50 lakh.
  2. Societies intend avail exemption under Section 11 are also required to file  income tax returns if their income is more than Rs 2.50 lakh.

Last date for submission of return –

Societies claiming exemption under section 10(23C)(iiiad) are  required to submit the return by 31st July   if its income is more than Rs 2.50 lakh.

Objective is not to earn profit –

 Society, who intend to run the educational institution and does not have the objective to earn profit, then such society or educational institution should clearly mention in its constitution that it has been formed with the objective to not earn the profit. A company made under section 25 of Companies Act, 2013 can be formed with the objective to not earn profit. 

Important forms related to trust

Form No.Particulars
10B and 10BBAudit Report
Form 10/9AStatement to be submitted if 85% amount is not utilized
ITR-7Income Tax Return
Form 10AApplication for provisional registration
Form 10ABApplication for renewal or permanent registration
Form 10ACCertificate of issue of provisional registration
Form 10ADOrder to cancel registration
Form 10BDReturns of donations received
Form 10BECertificate of Donation Received

Important dates related to trust or education society

Date of submission of Form 10/9A31 August
Date of submission of Form 10B/10BB (Audit Report)30 September
Last date of submission of ITR-731 Oct
Date of furnishing return for entities availing exemption under section 10(23C)(iiiad)/(iiiac)31 July
Submission of Form 10BD in respect of donations received31 May
Certificate of donation received to be continued in Form 10BE31 May

Tax Rates and slabs for Trust or society

Total Income (Rs)Rate
Up to Rs. 2,50,000Nil
Rs. 2,50,001- Rs. 5,00,0005%
Rs. 5,00,001- Rs. 10,00,00020%
Above Rs. 10,00,00030%  

Hence, Get the lowdown on tax planning from the top and best C A in Udaipur for creation and formation of Charitable or religious’ trust or society.

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