Income of Charitable Institution or Fund [Section 10(23C)(iv)]
Any income of a charitable institution or fund which is approved by the prescribed authority
having regard to its objects and its importance throughout India or throughout any State or States
is exempt from tax.
CBDT has authorized Commissioners of Income-tax (Exemptions) via Notification No. 75/2014 dated 1-12-2014 for granting approval under this section.
Income of religious/charitable trust [Section 10(23C)(v)]
Income of any trust (including any other legal obligation) or institution formed wholly for public
religious purposes or wholly for public religious and charitable purposes, which is approved by
the prescribed authority having regard to the manner in which the affairs of the trust or institution
are administered and supervised for ensuring that the income accruing thereto is properly applied
for the objects thereof, is exempt from tax.
CBDT has authorized Commissioners of Income-tax (Exemptions) via Notification No. 75/2014 dated 1-12-2014 for granting approval under this section.
Conditions for claiming exemption under section 10(23C)(iv)/(v)/(vi)/(via)
In order to claim exemption under section 10(23C)(iv)/(v)/(vi)/(via), the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, had to comply with the following conditions:
1. An application in Form No. 56 (for claiming exemption under section 10(23C)(iv) and (v) or continuance thereof) and in Form No. 56D (for claiming exemption under section 10(23C)(vi) and (via) or continuance thereof) has to filed with prescribed authority, i.e., Commissioners of Income-tax (Exemptions).
2. It should furnish such documents (including audited annual accounts) or information, which the prescribed authority, i.e., Commissioners of Income-tax (Exemptions) may consider necessary in order to satisfy itself about the genuineness of the activities of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be. With effect from 1/09/2019, the CIT (Exemption) may also call for such documents or information from the institution or trust as he thinks necessary to satisfy himself that the institution or trust has complied with the requirements of any other law for the time being in force as are material for the purpose of achieving its objects.
3. It should apply its income, or accumulates it for application, wholly and exclusively to the objects for which it is established and in a case where more than fifteen per cent of its income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five year.
4. Funds should not be invested or deposited for any period during the previous year otherwise than in any one or more of the forms/modes specified in section 11(5). However, this condition is not applicable in respect of the following:-
(i) any assets which form part of the corpus of the fund, trust or institution or any university or other educational institution or any hospital or other medical institution as on the 1st day of June, 1973;
(ii) Equity shares of a public company, held by any university or other educational institution or any hospital or other medical institution where such equity shares form part of the corpus of any university or other educational institution or any hospital or other medical institution as on the 1st day of June, 1998
(iii) Debentures of a company acquired by the fund, trust or institution or any university or other educational institution or any hospital or other medical institution before the 1st day of March, 1983;
(iv) any accretion to the shares, forming part of the corpus of the fund mentioned in point no. (i) and (ii), by way of bonus shares allotted to the fund, trust or institution or any university or other educational institution or any hospital or other medical institution;
(v) voluntary contributions received and maintained in the form of jewellery, furniture or any other article as the Board may, by notification in the Official Gazette, specify,
Note:
1. Exemption shall not be denied in relation to voluntary contribution [other than voluntary contribution in cash or voluntary contribution of the nature referred to in (i), (ii), (iii), (iv) or (v) supra]subject to the condition that such voluntary contribution is not held by the fund, trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11, after the expiry of one year from the end of the previous year in which such asset is acquired. [As amended by Finance (No. 2) Act, 2019]
2. Exemption is not available in relation to any income of the fund, trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of account are maintained by it in respect of such business
5. For claiming exemption under section 10(23C)(iv) and (v), the fund, trust or institution, as the case may be, should disinvest by March 30, 1993, all the investment made before April 1, 1989, otherwise than in any one or more of the forms or modes specified in section 11(5).
6. For claiming exemption under section 10(23C)(vi) and (via), the university or other educational institution or any hospital or other medical institution, as the case may be, should disinvest by March 30, 2001, all the investment made before June 1, 1998, otherwise than in any one or more of the forms or modes specified in section 11(5).
7. If taxable income [before giving exemption under section 10(23C)] exceeds the exemption limit, the institution should get books of account audited in Form No. 10BB and audit report should be submitted along with return of income.
8. Where any fund, trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, has been approved or notified for claiming exemption under section 10(23C)(iv)/(v)/(vi)/(via) then it would not be entitled to claim any benefit of exemption under other provisions of section 10 (except the exemption in respect of agricultural income.
Note:
1. For the purpose of claiming exemption under section 10(23C), where any income is required to be applied or accumulated, then, for such purpose the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of income under this clause in the same or any other previous year.
2. Any donation given by a trust/institution [registered under section 12AA or referred to in section 10(23C)(iv)/(v)/(vi)/(via)] to any other trust [which is registered under section 12AA or referred to in section 10(23C)(iv)/(v)/(vi)/(via)] as contribution with specific direction that they shall form part of the corpus of the recipient trust/institution, shall not be treated as application of income.
CBDT has authorized Commissioners of Income-tax (Exemptions) via Notification No. 75/2014 dated 1-12-2014 for granting approval under this section.
Income of religious/charitable trust [Section 10(23C)(v)]
CBDT has authorized Commissioners of Income-tax (Exemptions) via Notification No. 75/2014 dated 1-12-2014 for granting approval under this section.
Conditions for claiming exemption under section 10(23C)(iv)/(v)/(vi)/(via)
In order to claim exemption under section 10(23C)(iv)/(v)/(vi)/(via), the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, had to comply with the following conditions:
1. An application in Form No. 56 (for claiming exemption under section 10(23C)(iv) and (v) or continuance thereof) and in Form No. 56D (for claiming exemption under section 10(23C)(vi) and (via) or continuance thereof) has to filed with prescribed authority, i.e., Commissioners of Income-tax (Exemptions).
2. It should furnish such documents (including audited annual accounts) or information, which the prescribed authority, i.e., Commissioners of Income-tax (Exemptions) may consider necessary in order to satisfy itself about the genuineness of the activities of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be. With effect from 1/09/2019, the CIT (Exemption) may also call for such documents or information from the institution or trust as he thinks necessary to satisfy himself that the institution or trust has complied with the requirements of any other law for the time being in force as are material for the purpose of achieving its objects.
3. It should apply its income, or accumulates it for application, wholly and exclusively to the objects for which it is established and in a case where more than fifteen per cent of its income is accumulated on or after the 1st day of April, 2002, the period of the accumulation of the amount exceeding fifteen per cent of its income shall in no case exceed five year.
4. Funds should not be invested or deposited for any period during the previous year otherwise than in any one or more of the forms/modes specified in section 11(5). However, this condition is not applicable in respect of the following:-
(i) any assets which form part of the corpus of the fund, trust or institution or any university or other educational institution or any hospital or other medical institution as on the 1st day of June, 1973;
(ii) Equity shares of a public company, held by any university or other educational institution or any hospital or other medical institution where such equity shares form part of the corpus of any university or other educational institution or any hospital or other medical institution as on the 1st day of June, 1998
(iii) Debentures of a company acquired by the fund, trust or institution or any university or other educational institution or any hospital or other medical institution before the 1st day of March, 1983;
(iv) any accretion to the shares, forming part of the corpus of the fund mentioned in point no. (i) and (ii), by way of bonus shares allotted to the fund, trust or institution or any university or other educational institution or any hospital or other medical institution;
(v) voluntary contributions received and maintained in the form of jewellery, furniture or any other article as the Board may, by notification in the Official Gazette, specify,
1. Exemption shall not be denied in relation to voluntary contribution [other than voluntary contribution in cash or voluntary contribution of the nature referred to in (i), (ii), (iii), (iv) or (v) supra]subject to the condition that such voluntary contribution is not held by the fund, trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11, after the expiry of one year from the end of the previous year in which such asset is acquired. [As amended by Finance (No. 2) Act, 2019]
2. Exemption is not available in relation to any income of the fund, trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, being profits and gains of business, unless the business is incidental to the attainment of its objectives and separate books of account are maintained by it in respect of such business
5. For claiming exemption under section 10(23C)(iv) and (v), the fund, trust or institution, as the case may be, should disinvest by March 30, 1993, all the investment made before April 1, 1989, otherwise than in any one or more of the forms or modes specified in section 11(5).
6. For claiming exemption under section 10(23C)(vi) and (via), the university or other educational institution or any hospital or other medical institution, as the case may be, should disinvest by March 30, 2001, all the investment made before June 1, 1998, otherwise than in any one or more of the forms or modes specified in section 11(5).
7. If taxable income [before giving exemption under section 10(23C)] exceeds the exemption limit, the institution should get books of account audited in Form No. 10BB and audit report should be submitted along with return of income.
8. Where any fund, trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, has been approved or notified for claiming exemption under section 10(23C)(iv)/(v)/(vi)/(via) then it would not be entitled to claim any benefit of exemption under other provisions of section 10 (except the exemption in respect of agricultural income.
Note:
1. For the purpose of claiming exemption under section 10(23C), where any income is required to be applied or accumulated, then, for such purpose the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset, acquisition of which has been claimed as an application of income under this clause in the same or any other previous year.
2. Any donation given by a trust/institution [registered under section 12AA or referred to in section 10(23C)(iv)/(v)/(vi)/(via)] to any other trust [which is registered under section 12AA or referred to in section 10(23C)(iv)/(v)/(vi)/(via)] as contribution with specific direction that they shall form part of the corpus of the recipient trust/institution, shall not be treated as application of income.
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