Income Tax Provisions For A “Charitable & Religious Trust”

1. Maintenance of Books of Account Though there is no provision under section 44AA compelling the charitable trust for maintenance of accounts, however, section 80G(5)(iv) requires maintenance of regular accounts of receipts and expenditures only. 2. Application for Permanent Account Number The Income—Tax Act specifically lays down a mandatory provision for a trust to make an application for allotment of permanent account number to the Assessing Officer in form number 49A of Income-tax Rules. Not making an application for permanent account number by the trust or institution makes it liable for being penalised upto Rs. 10000 for the default. It should, therefore, make an application immediately on registration of trust or institution. 3. Application for Tax Deduction Account Number The Trust or Institution should make an application forallotment of tax deduction account number to the AssessingOfficer or the prescribed authority, in form number 49B of Income-Tax Rules immediately on registration of the trust or institution and quote the same on all the challans for payment of sums under section 200, on all the TDS certificates and all the returns delivered under section 206, 206A and 206B. A penalty of Rs. 10,000/- has been prescribed by section 272BB in case of failure to do so. 4. Audit Where Necessary The accounts of the trust should be audited for such accounting year in which its inc?ome without giving effect to the provisions of section 11 and 12, exceeds [the maximum amount which is not chargeable to income taxj. The audit report has to be in Form No. 10B. 5. Filing of Income Tax Return Before Due-date The public religious and charitable trust and institutions claiming exemption of their income under the provisions of section 11 of the Income-tax Act are required to file their returns of income in Form No. 3A. The Income- tax Act grants complete exemption in respect of the income derived from property held under trust or other legal obligation wholly for charitable or religious purposes, or in part only for such purposes, subject to certain conditions. The total income for this purpose has to be computed under Income-tax Act without giving effect to the provisions of sections 11 and 12. The due date for filing return in case the accounts of the trust are audited is 30th September and 315t July in all other cases. However, in case of a trust required to furnish transfer pricing report u/s. 92E, due date for filing of return will be 30th November. It may also be noted here that where a charitable trust does not file the return of income as required by section 1 39(4A), it loses its exemption. A trust is also entitled to revise the returns of income tax is fied by it, within the time prescribed under section 139(1), if it discovers that there has been an error or mistake in the original return. The revised return can be filed within one year from the end of the relevant assessment year. Similar principles apply, so far as may be, to educational and medical institutions, scientific institutions, notified trusts, trade unions, news agencies, etc. These institutions are now required to file their returns of income if their income (without giving effect to exemptions under section 10) exceeds the maximum amount not chargeable to income-tax [Section 13 9(4C)J. Failure to furnish the return of income attracts penalty under the Act. The return of income will not be considered as defective if the certificate for the tax deducted at source has not been furnished along with the return of income due to the default of the payer in not furnishing such certificate. The certificate is, however, required to be produced within two years from the end of the assessment year. [Explanation to section 139(9)].