Charitable Trusts/Societies/Foundations are all covered under the head of NGO i.e. Non-Governmental Organizations that works for the social and economic welfare of the society. There are different forms of organizations that can be formed for raising out a hand for charitable activities.

Once money is placed into the trust, the interest it accumulates is taxable as income, either to the beneficiary or the trust itself. The trust must pay taxes on any interest income it holds.

In order to be eligible for claiming exemption, under income tax it is essential that the income of the trust is applied to such objects. A charitable trust or institution will have to apply at least 85 % of the income to charitable purposes.

‘Charitable purpose’ includes relief of poor people like education, medical relief, and the advancement of any object of general public utility. One of the benefit which NGOs have is Under Section 80G.

The main advantage of income tax return filing of charitable is to easily receive the government grants in their field . If your trust is eligible as per the guidelines of ministry/ organization / department then only you can apply for the government grants . The funding issued by the concerned ministry or department is based on the income tax return , profile of NGO and  Annual Reports, Audit Reports. So ITR filing is the key factor to receive the government grant.

Income Tax return filling helps charitable trusts in taking loan from various Financial Institutions. Most of the banks and NBFCs ask for ITR receipts from business for latest three year when a business applies for a high-value loan like long term loan or working capital loan. Lenders consider ITR as the most authentic document supporting business turnover and income. Hence, you should regularly file income tax return if you want to take loan in the future

Income derived from property held under trust or of an institution wholly for charitable/religious purpose is exempt, if 85% of the income is spent on the objects of the trust, during the year. If the amount spent is less than 85% of the income, the shortfall is taxable. The Income Tax Act exempts the income of a charitable trust from the scope of Income Tax. If the charitable or religious trust spends more than or equal to 85% of its total receipts towards its object in India, then there is no tax on balance 15%.

     4.   Define net worth

The ITR filed with the Government defines the financial worth of a company. Return filling help in tracking the net worth of an entity it shows companies turnover, its assets and income, the track of ITR shows the financial capacity and also increases the capital base of a person.

ITR-7 is for persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) or section 139(4E) or section 139(4F).

    Ø  Return by charitable trust (section 139(4A)): Return under section 139(4A) is required to be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.

    Ø  Return by agency (section 139(4C)): Return under section 139(4C) is required to be filed by every:

1. Scientific research association;

2. News agency

3. Association or institution referred to in section 10(23A)

4. Institution referred to in section 10(23B)

5. Fund or institution or university or other educational institution or any hospital or other medical institution.

    Ø  Return by business trust (section 139(4E): Return under section 139(4E) must be filed by every business trust which is not required to furnish return of income or loss under any other provisions under this section.

    Ø  Return by political party (section 139(4B): Return under section 139(4B) is required to be filed by a political party if the total income without giving effect to the provisions of section 139A exceeds the maximum amount, not chargeable to income-tax.

    Ø  Return by university, colleges (section 139(4D): Return under section 139(4D) is required to be filed by every university, college or other institution, which is not required to furnish return of income or loss under any other provision under this section

    Ø  Return by investment fund (section 139(4F): Return under section 139(4F) must be filed by any investment fund referred to in section 115UB. It is not required to furnish return of income or loss under any other provisions of this section.

Documents Required

Details of all the members/directors of Charitable Institution

Payment and Receipt Statement

Previous Statement, if filed any

Procedure

Step 1. Fill the simple questionnaire provided by our team.

Step 2. Provide us all the necessary documents as mention above

Step 3.We will prepare the financial statements based on the documents provided to us and file your income tax return before the due date and protect you from any penalty.

Step 4. We will further inform you after filling your Income Tax Return and also provide you the return form and computation.

If the trust or charitable institute fails to furnish the return of income or fails to furnish the same before the due date, then, the charitable trust shall be liable to pay a penalty under section 272A(2) which shall be Rs. 100 for every till the failure continues.

500000-1000000 : 20%

Above 1000000 : 30%

Health and Education Cess

4% of Income Tax + Surcharge