The income tax law has explicit provisions when it comes to charitable and religious organization's Registration. Such organisations have been provided exemption from the income tax provided they have obtained Charitable Trust Registration under the law. Further, donors of Charitable Trust organisations are provided with a deduction for the number of donations made provided the organization has obtained registration under Section 80G.
Therefore, Charitable Trust Registration under the income tax act provides a bouquet of benefits to these organisations. However, charitable and religious organisations need to meet certain eligibility criteria in order to obtain a charitable trust registration certificate. What are these criteria? Let’s find out!
Before discussing the eligibility criteria for obtaining a charitable trust registration Certificate, we need to understand what is the meaning of charitable purpose. As per the income tax law, charitable purpose means relief of the poor, education, yoga, medical relief, preservation of the environment (including watersheds, forests, and wildlife), and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility.
However, the ‘advancement of any other object of a general public utility shall not be considered as a charitable purpose if it involves activities in the nature of commerce, trade, or business or provision of any service for fees or consideration. However, if such activity is actually carried out for the advancement of any object of general-purpose utility and the aggregate receipts from such activity do not exceed 20% of the total receipts of the trust or institution undertaking such activity, then it shall be considered a charitable purpose.
Any charitable organization willing to obtain charitable trust registration under the income tax act shall make an application for registration to the Principal Commissioner or Commissioner of Income Tax in Form No. 10A.
Further, donors of an organization can claim a deduction for donations made to charitable organizations. However, the such charitable organization shall fulfill the conditions prescribed under Section 80G(5) including the following:
The following are the benefits of getting Charitable Trust Registration under Section 12A and 80G of the income tax act:
Following were the explicit conditions under various provisions of the income tax law surrounding registrations and exemptions for charitable and religious institutions. Once you satisfy the eligibility criteria for Charitable Trust Registration, you can proceed with the trust registration process. In case of any query in relation to the Charitable Trust Registration Certificate of trust under the income tax act, please feel free to contact the ASC Group.
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