{"id":38751,"date":"2025-06-05T15:03:00","date_gmt":"2025-06-05T09:33:00","guid":{"rendered":"https:\/\/www.kanakkupillai.com\/learn\/?p=38751"},"modified":"2025-06-05T15:03:00","modified_gmt":"2025-06-05T09:33:00","slug":"tax-exemption-for-charitable-trust","status":"publish","type":"post","link":"https:\/\/www.kanakkupillai.com\/learn\/tax-exemption-for-charitable-trust\/","title":{"rendered":"Tax Exemption for Charitable Trust"},"content":{"rendered":"

Are you aware that religious\/charitable deeds through donations or by performing those activities can help you save tax? Section 80G of the Indian Income Tax Act lays down provisions for the same. According to 80G, you can subtract your donations to State and Central Relief Funds, NGOs, and different charitable institutions to reach your taxable income.<\/p>\n

To promote the activities of charitable and religious institutions, the Indian Government offers various tax rebates under Section 11 of the Income Tax Act. Nevertheless, they are only available for exclusive types of income, and the entity must meet specific criteria to claim them. Keep reading to know more.<\/p>\n

Overview of Charitable Trusts<\/h2>\n

The term \u2018Charity\u2019 signifies altruism in thought and action. It encompasses the concept of prioritizing the needs of others over one\u2019s own, as exemplified in the Supreme Court\u2019s decision in Andhra Chamber of Commerce [1965] 55 ITR 722 (SC).<\/p>\n

Charity constitutes selfless, voluntary aid, either in kind or money, to the needy. Therefore, there are various non-profit entities and Non-Governmental Organizations (NGOs) that continuously work on charitable tasks by accumulating funds worldwide through the establishment of trusts or institutions.<\/p>\n

Trusts can be formed for religious purposes, charitable purposes, or both.<\/p>\n

Endeavors of such institutions play a key role in encouraging economic development and the social welfare aims of the Government. Their outstretched and more localized approach aids in recognizing the needy and extending a supporting hand. For this reason, the Government has offered various tax incentives and exemptions to charitable institutions, along with the advantage of Section 80G to individuals making donations to these trusts or institutions.<\/p>\n

Tax Exemption for Charitable Trust<\/h2>\n

A Trust comprises an obligation annexed to the ownership of property and emanating from a confidence reposed in and acknowledged by the owner, pr approved and declared by him, for the advantage of another. Charitable Trusts<\/a> and Section 8 Companies are qualified for tax exemption under Sections 11, 12A, 12, 12AA, and 13 of the Income Tax Act. Charitable purpose comprises relief of the poor, preservation of the environment, preservation of monuments or places or objects of historic or artistic interest, medical relief, education, and the progress of any other object of general public use. This article reviews the tax exemption for Charitable trusts in India.<\/p>\n

1. Charitable Trust Conducting Business<\/h3>\n

There is no restriction on a charitable trust from carrying on business. The income from a business carried on by a charitable trust shall also be eligible for tax exemption if specific criteria are met. Additionally, any income of a charitable trust shall not be eligible for tax exemption unless the business is incidental to the achievement of the objects of the trust, and independent books of account are kept pertaining to such business. For example, suppose a charitable trust is set up for medical relief. In that case, the running of a hospital or dispensary, or a nursing home, or the manufacturing of medicines shall be regarded as a business incidental to the aim of the charitable trust.<\/p>\n

2. Trust Claiming Tax Exemption under Section 10<\/h3>\n

Institutions and trusts created for the promotion of scientific research, sports, khadi and village industries, specific professions, education, etc., or as hospitals and notified religious or charitable institutions, are eligible for complete exemption from tax under Section 10 of the Income Tax Act<\/a>.<\/p>\n

3. Trust Claiming Tax Exemption under Section 11<\/h3>\n

Section 11 enumerates that any income, gain, or profit sourced from property held under trust or other legal obligation entirely for charitable and religious purposes shall not be incorporated in the total income or the institution or trust in so far as such income is used or gathered for application to such purposes.<\/p>\n

4. Trust Qualified for Tax Exemption<\/h3>\n

The specified charitable or religious trusts are liable to an exemption under section 11 and section 12 on the satisfaction of specific conditions:<\/p>\n