TAX RATES APPLICABLE TO TRUSTS IN INDIA

 

TAX RATES APPLICABLE TO TRUSTS IN INDIA

The tax rates applicable to a trust depend on the type of trust and the income earned by the trust. Usually, trusts are subject to different tax rates than individuals, and the rates can vary depending on the type of trust like private, public religious or charitable and the source of income of the trust. Charitable or religious trusts are subject to charge at special tax rates and may qualify for tax-exempt status too.

In India, charitable trusts are subject to charge different tax according to rules and regulation to the trusts. Here are some general guidelines regarding the tax rates applicable to charitable trusts:

GST: GST applicability depend the nature and types of trusts and also depends on the turnover limit which is liable to get registered under GST Act in India.

Income Tax: Charitable trusts registered under section 12AA of the Income Tax Act, 1961 are exempt from income tax on the income earned by the trust. However, the trust is required to file an annual income tax return, and failure to do so can result in penalties.

Donations: If charitable trusts registered under section 80G of the Income Tax Act, 1961 are eligible for tax deductions. The tax deduction rates vary depending on the type of donation and the donor's tax bracket.

Capital Gains Tax: If a charitable trust sells an asset and earns a capital gain, the trust may be subject to capital gains tax. However, if the trust uses the proceeds from the sale to acquire another asset that is used for charitable purposes, it may be eligible for an exemption from capital gains tax.

It is highly recommended that the tax rules for charitable trusts in India getting complex gradually, and the specific tax rates applicable to a particular trust will depend on a variety of factors. If you have questions about the tax treatment of a charitable trust, it's always best to consult with a chartered accountant, tax professional or a person who specializes in trusts.

CA KHALID REHMAN

(Chartered Accountant)

 

 

 

 

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