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This article will focus on the meaning, benefits of Section 12 of income Tax Act.
Table of Contents
Section 12 of Income tax act[1] talks about voluntary donation received by a trust for charitable or religious purposes will be income derived from the property held under the trust wholly for the purposes mentioned and can claim exemption following the conditions mentioned in section 11 of the Act.
The following are the reasons for the registration of trusts under section 12 of income tax act:
Types of registration of a trust made under Section 12 of Income Tax Act
The following are the types of registration of a trust made under Section 12 of Income Tax regulations:
Section 12AA talks about registration of a trust made under Section 12 of Income Tax Regulation.
The Principal Commissioner has to take the following steps to register a trust created under Section 12 of Income Tax Act:
A copy of such an order must be given to the applicant, and a reasonable opportunity must be given to the applicant in case of refusal of registration.
The following conditions are to be satisfied to claim an exemption under section 11:
Application of income means spending of income by the assesse and such amount must be included in the total income. The applied income is taxable in possession of assesse.
Application of Income is mentioned under Section 11 (1), and it includes:
Accumulated income is the net income retained by the corporation or the company over the times and not distributed as dividends to the shareholders. The accumulated income in respect of trusts established under section 12 of the income tax act is the income accumulated for charitable or religious purposes.
Section 11(2) of income tax act states that:
Section 11(3) of income tax act states that:
If the accumulated income above 15% of the net income is not deposited or invested in the manner prescribed under section 11(5), the income ceases to accumulate income.
Section 13 of the income tax act talks regarding the forfeiture of exemption of incomes of the trusts established under section 12 of income tax act.
The following incomes by the trusts established under section 12 of income tax act are not applicable for exemption under section 13 is:
Section 12 talks about a donation received by a trust for charitable or religious purposes will be income derived from the property held under the trust wholly for the purposes mentioned. They can claim exemption following the conditions mentioned in section 11 of the Act.
Read our article:Read Details About Section 13 of the Income Tax Act, 1961
Completed BA LLB from JEMTEC, School of Law, Greater Noida (Affiliated to GGSIP University, New Delhi). I have an experience of about 2 years in various fields of corporate laws, but I have a keen interest in researching on legal issues and to gain knowledge. I always strive to bring the best to work on what I do.
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