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Charitable Trust Audit

Charitable Trust Audit is applicable if total income of Trust or institution ( without giving effect of provisions of Section 11 and 12) exceeds the maximum amount which is not chargeable to tax in any previous year. Charitable Trust Audit need to conducted by Chartered Accountant. Charitable Trust audit report need to prepared in Form 10 B prescribed by rules 17B of Income Tax Act 1962. Chartered Accountant who doing Charitable Trust Audit need to verify books of accounts prepare audit report and furnish same.


Highlight of Charitable Trust Audit

  1. Get Books of Account Audited by Chartered Accountant before 30 September
  2. File Income tax return before 31 July / 30 Sept
  3. Submit Trust report online at Charity Commission site
  4. Submit physical copies at Charity Commission office

 


Charitable Trust Income Tax Return Filing

Vide Finance Act, 2017 the entities Charitable Trust registered under Section 12AA are required to file Income Tax return. Income tax return for Charitable Trust in mandatory if total income exceed basis exemption. The basis exemption limit is Rs. 2.50 Lac for Assessment year 2017-18 to AY 2019-20. In case income tax return is not filed as per section 139(4A) with in time allowed then Charitable Trust would loose exemption under section 11 and 12. The due date for filing income tax return of Charitable Trust is 30 September if audited if not then 31 July in all other cases. Where Charitable Trust required to furnish audit report as per Transfer Pricing Section 92E due date for return will be 30th November.

Charitable Trust not filing income tax return in due date looses its exemption. Trust can revise income tax return as per section 139(1) if it discovered that there has been error or mistake. Trust can revise return within one year from  end of relevant assessment year. Same shall apply to educational and medical institutions , scientific institutions , notified trust , trade unions , news agencies etc.


Books Of Account to be maintained by Charitable Trust ?

There is no provision in Income Tax Act 1961, Section 44AA compelling books of account to be  2maintained by Charitable Trust. Section 80G (iv) required Charitable Trust to maintain regular books of account of Expenditure and Income.


PAN Card For Charitable Trust Necessary ?

Income Tax Act makes mandatory provision for a trust to make application for Allotment of Permanent Account number. PAN for Trust to be applied in Form 49 A of Income Tax Rules. No making PAN application liable for penalty utpo Rs.10000/-. After Charitable Trust Audit income tax return 

Also trustees, funders , principle officer , or any other person competent to act on behalf of such person shall also apply for PAN.


TDS Applicability for Charitable Trust ?

TAN Registration for Charitable Trust need to applied in Form 49 B immediately on registration. Charitable Trust shall mention TAN number on TDS challans of Section 200. And TDS Certificate need to be issued. Penalty of Rs. 10000 has been given under section 272BB in case of failure.

Form Finance Act 2018 , TDS provisions shall be applicable for Charitable Trust. Section 11 provide that for application of income therefore Section 40A (3A) provisions shall apply for Charitable Trust. Hence non deduction of TDS by Charitable Trust shall attract disallowance under  Income Tax. Charitable Trust need to mandatory  required to deduct TDS and file quarterly TDS returns.


Income Tax Calculation For Charitable Trust

Below are Steps for Income Tax Calculation for Charitable Trust or institutions claiming exemption under section 11 and 12.

  1. Calculate the gross receipts of trust excluding the corpus donation
  2. Gross receipt (1) Less income earned
  3. Calculate the income earned from Property by deduction (2-3)
  4. Calculate the amount applied for charitable or religious purposes in accordance with object of Charitable Trust
  5. Calculate difference between (3) minus (4). The difference should not exceed 15% of the amount in (3)

 


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