TAXATION OF PRIVATE BENEFICIARY AND CHARITABLE TRUST
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Transcript of TAXATION OF PRIVATE BENEFICIARY AND CHARITABLE TRUST
1Nangia and Company
TAXATION OF PRIVATE BENEFICIARY AND CHARITABLE
TRUST
Presented By CA Swatantra Singh FCA, MBA
Email ID: [email protected]
New Delhi, (India)
9811322785
www..carajput.com
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Structure of a Non Profit Organization in India
In India non profit organizations can be registered as:
Trusts Societies Section 25 Companies
The Income Tax Act gives all categories equal treatment, in terms of exempting their income and granting 80G certificates, whereby donors to non-profit organizations may claim a rebate against donations made. Foreign contributions to non-profits are governed by FC(R)A regulations and the Home Ministry
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Comparison among Trust, Society & Section 25 Company
Points of Differences Trust Society Section 25 Company
Statute / Legislation Relevant State Trust Act or Indian Trust Act, 1882
Societies Registration Act, 1860 Indian Companies Act, 1956
Jurisdiction Deputy Registrar/Charity commissioner
Registrar of societies (charity commissioner in Maharashtra).
Registrar of companies
Registration As trust As Society
In Maharashtra, both as a society and as a trust
As a company u/s 25 of the Indian Companies Act.
Registration Document Trust deed Memorandum of association and rules and regulations
Memorandum and articles of association. and regulations
Stamp Duty Trust deed to be executed on non-judicial stamp paper, vary from state to state
No stamp paper required for memorandum of association and rules and regulations.
No stamp paper required for memorandum and articles of association.
Members Required Minimum – two trustees. No upper limit.
Minimum – seven managing committee members. No upper limit.
Minimum three .No upper limit.
Board of Management Trustees / Board of Trustees
Governing body or council/managing or executive committee
Board of directors/ Managing committee
Mode of Succession on Board of management
Appointment or Election Appointment or Election by members of the general body
Election by members of the general body
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Meaning of ‘Trust’
A trust is a relationship in which :
a person or entity (the trustee) holds legal title
to certain property (the trust property or trust corpus), but is bound by a fiduciary duty to exercise that legal control
for the benefit of one or more individuals or organizations (the beneficiary), who hold ‘beneficial’ or ‘equitable’ title.
The trust is governed by the terms of the (usually) written trust agreement and local law.
The entity (one or more individuals, a partnership or a corporation) that creates the trust is called the settlor.
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Types of Trusts Bare Trust
A trust where the beneficiary is absolutely entitled to the assets, and the trustee is obliged simply to pay them over to the beneficiary. ‘Resulting’ and ‘Constructive’ trusts are usually bare trusts. Bare trusts generally do not continue for any length of time, unless they arise out of protracted litigation, or the beneficiaries are minors (in which case the bare trust must continue till they reach majority)
Constructive Trust
It is imposed by law as an equitable remedy. It generally occurs due to some wrong doing, where the wrong doer has acquired legal title to some property and cannot in good conscience be allowed to benefit from it.
Resulting Trust
It is a form of implied trust which occurs where a trust fails, wholly or in part, as a result of which the settlor becomes entitled to the assets.
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Types of Trusts
Discretionary Trust
It is an arrangement where the trustee may choose, from time to time, who (if anyone) among the beneficiaries is to benefit from the trust, and to what extent, so long as the decision is made based on the beneficiaries best interests. The purpose of such a trust is that no individual can claim to be entitled to any specific interest in the trustee’s assets, which often has tax advantages or asset protection advantages.
Fixed Trust
the entitlement of the beneficiaries is fixed by the settlor. The trustee has little or no discretion. E.g.
a trust for a minor (to X if she attains 21) a life interest (to pay the income to X for her lifetime)
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Types of Trusts Hybrid Trust
It combines elements of both fixed and discretionary trusts. The trustee must pay a certain amount of the trust property to each beneficiary fixed by the settlor. But the trustee has the discretion as to how any remaining trust property, once these fixed amounts have been paid out, is to be paid to the beneficiaries.
Express Trust
It arises where a settlor deliberately and consciously decides to create a trust, over his or her assets, either now or upon his death. In these case this will be achieved by signing a trust instrument which will either be a will or a trust deed.
Implied Trust
It is created where some of the legal requirements for an express trust are not met, but an intention on behalf of the parties to create a trust can be presumed to exist.
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Types of Trusts Intervivos Trust
A settlor who is living at the time the trust is established creates an intervivos trust.
Testamentary Trust
A trust created in an individual’s will.
Irrevocable Trust
It is the one that will not come to an end until the terms of the trust have been fulfilled.
Revocable Trust
A trust of this kind can be revoked (cancelled) by its settlor at any time.
Public Trusts
Like private trusts, public trusts may be created inter-vivos or by will.
Public trusts are however governed by general law, though the principles forming the basis of the Indian Trusts Act can be applied in the case. It was held in the case of State of UP Vs. Bansi Dhar, AIR (1974) SC 1084, 1090 that “it is true that Indian Trusts Act relates only to private trusts, public charitable trust have been expressly excluded from its ambit. But while provisions of section 83 of the Trusts Act proprio vigore do not apply, there is a common area of principles which covers all trusts, private and public, and merely because they find a place in the trusts Act, they cannot become untouchable where public trusts are involved.
It is a trust established for charitable purposes; normally must be for the benefit of public at large or a class of beneficiaries.
These are entitled to special treatment under the law of taxation.
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Public Trusts
These are exempt from the rule against perpetuities, which would otherwise require a trust to come to an end after a certain period. Charitable trusts may continue indefinitely.
A formal deed is not necessary to constitute a public trusts, even where immovable property is dedicated because section 5 of Indian Trusts Act 1882 is not applicable on public Trusts.
Public trusts are an exception to the well settled rule that there is no valid trust unless the objects thereof are specified. The trusts is not
allowed to fail for uncertainty .
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Public Trusts A charitable trust is synonymous with public trust. There is nothing
called as a private charitable trust.
Charitable trusts come under the doctrine of cy pres, under which if the charitable purposes of the trust cannot be fulfilled, then they can be replaced by new and more appropriate charitable purposes.
Management or Control may vest in private hands. In the case of Smt. Ganesha Devi Rami Devi Charity Trust Vs. CIT (1969) 71 ITR 696, 704 (Cal) it was held that “the implication, therefore, is that if the trust or fund is controlled by a body of persons which is not a public body, but if it enures to the benefit of a public it will still be a charitable trust or fund
Private Trusts Private trust may be created inter vivos or by will.
Private trust are governed by the provisions of the Indian Trust Act 1882
It has one or more particular individuals as its beneficiary.
Where immovable properties worth more than Rs. 100 are transferred, trust will not be operated unless it is registered (Gostha Behari Gose Vs. University of Calcutta, AIR 1972 Cal 61 ) .Trust created by will does not require any stamp
Private trusts are void for perpetuity
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Partly Private and Partly Public Trusts?
Dedication may be absolute , or it may be partial. Where the dedication made by a settler in favor of an idol covers the entire beneficial interest which he had in the property, the debutter is an absolute or complete debutter. Where, however, some proprietary or pecuniary right or interest in the property is either indisposed of or is reserved for the settlor’s family or relations, a case of partial dedication may arise. ( K.Mukherjea’s Hindu Law of Religious and Charitable trusts, 4th edition page 174-5)
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Partly Private and Partly Public Trusts?
If the dedication is partial ,a trust in favor of a charity is not created but a charge in favor of charity is attached to , and follows, the property which retains its original private and secular Character ( Menakuru Dasaratharami Reddi V. Duddakuru Subba Rao, AIR 1957 SC 797)
In cases of partial debutter endowment , it is a question of construction whether idol is true beneficiary….. Or whether heirs are true beneficiaries…. ( Lord Shaw in Har Narayan V. Surya Kunwari, AIR 1921 PC 20)
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Charitable Trusts Vs. Religious Trusts.
Private Religious trusts Vs. Private charitable trusts?
What is to be noted is that there might be a private trust for religious purposes, but there can be no private charitable trust. [(CIT Vs. M. Jamal Mohamad Sahib (1941) 9 ITR 375 (Mad)]
Partly Charitable & Partly Religious Trusts?
In Hindu system there is no line of demarcation between religion and charity. But what a purely religious purposes and what religious purposes will be charitable must be entirely decided according to Hindu Law and Hindu Notions (Malayammal Vs. A.Malayalam Pillai (1991) Supp (2) SCC 579, 584)
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Legislations in India Governing Trusts A BRIEF SUMMARY OF THEIR PREAMBLES
THE INDIAN TRUSTS ACT, 1882“An Act to define and amend the law relating to Private Trusts and Trustees. The Indian Trusts Act was passed in 1882 to define law relating to private trusts and trustees.”
CHARITABLE AND RELIGIOUS TRUSTS ACT,1920“An Act to provide more effectual control over the administration of Charitable and Religious Trusts .Whereas it is expedient to provide facilities for the obtaining of information regarding trust created for public purposes of a charitable or religious nature,….
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Legislations in India Governing Trusts
RELIGIOUS ENDOWMENTS ACT 1863
An Act to enable the Government to divest itself of the management of Religious Endowments”
CHARITABLE ENDOWMENTS ACT, 1890
“An Act to provide for the Vesting and Administration of property held in the trust for charitable purposes.
Whereas it is expedient to provide for the vesting and administration of property held in trust for charitable purposes; It is hereby enacted as follows:”
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Legislations in India Governing Trusts
THE SOCIETIES REGISTRATION ACT ,1860.
“An Act for the Registration of Literary, Scientific and Charitable Societies
Whereas it is expedient the provision should be made for improving the legal condition of societies established for the promotion of literature, science, or the fine arts, or for the diffusion of useful knowledge, the diffusion of political education or for charitable purposes; it is enacted as follows:-”
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Legislations in India Governing Trusts
Apart from these central legislations , a number of statute have been enacted by the state legislatures dealing with religious and charitable trusts and endowments, For example:
The Madras Hindu Religious & Charitable Endowments Act (19 of 51)
The Bombay Public Trusts Act (29 of 1950) The Orissa Hindu Religious Endowments Act (4 of 1939) The Bihar Hindu Religious Trusts Act (1 of 1951)A trust which is registered in a state having a legislation for that
purpose has to follow the provisions of the State Act . The registration is done with the sub-registrar / civil court.
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How to form a Trust - Law & Procedure Essentials of a Trust
Who can form a trust ?
Capacity to create a Trust.
Who can be a trustee ?
Who can be a beneficiary ?
Subject matter of trust.
Instrument of Trust
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Essentials of a Trust
The existence of the author/settlor of the trust or someone at whose instance the trust comes into existence.
Clear intention of the author/settlor to create a trust.
Purpose of the Trust.
The Trust property
Beneficiaries of the Trust.
There must be divesting of the ownership by the author / settlor of the trust in favour of the beneficiary or the trustee.
Unless all these requisites are fulfilled a trust cannot be said to have come into existence.
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Who can form a Trust ? As per section 7 of the Indian Trusts Act, a trust can be formed –
by every person competent to contract, and by or on behalf of a minor, with the permission of a principal civil court
of original jurisdiction.
Besides individuals, a body of individuals or an artificial person such as an association of persons, an institution, a limited company, a Hindu undivided family through it's karta, can also form a trust.
It may, however, be noted that the Indian Trusts Act does not apply to public trusts which can be formed by any person under general law. Under the Hindu Law, any Hindu can create a Hindu endowment and under the Muslim law, any Muslim can create a public wakf. Public Trusts are essentially of charitable or religious nature, and can be constituted by any person.
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Capacity to create a Trust
As a general rule, any person, who has power of disposition over a property, has capacity to create a trust of such property. According to section 7 of the Transfer of Property Act, 1882, a person who is competent to contract and entitled to transfer the property or authorized to dispose of transferable property not his own, either wholly or in part and either absolutely or conditionally, has 'power of disposition of property'.
Thus, two basic things are required for being capable of forming a trustpower of disposition over property; and competence to contract.
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Who can be a Trustee ?
Every person capable of holding property can become a trustee. However, where the trust involves the exercise of discretion, he can accept or act as a trustee only if he is competent to contract.
No one is bound to accept trusteeship. Any number of persons may be appointed as trustees.
However, no trust is defeated for want of a trustee. Where there is no trustee in existence, an official trustee may be appointed by the court and the trust can be administered. An executor of a Will may become a trustee by his dealing with the assets under the provisions of the Will.
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Who can be a Beneficiary ?
In a private trust the beneficiaries are one or more ascertainable individuals.
In a public trust the beneficiaries are a body of uncertain or fluctuating individuals and may consist of a class of the public or the whole public.
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Subject matter of Trust Any property capable of being transferred can be a subject matter
of a trust.
Section 8 of the Indian Trust Act, however, provides that mere beneficial interest under a subsisting trust cannot be made the subject matter of another trust.
In the case of J.K. Trust vs. CIT (1957) 32 ITR 535 (S.C.), the Supreme Court had held that the word " property" under the Trusts Act is of the widest import and a business undertaking will undoubtedly be a property so that a running business can be made a subject matter of trust. This view has been followed in the case of in CIT vs. P. Krishna Warriar (1964) 53 ITR 176 (SC).
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Instrument of trust
The instrument by which the trust is declared is called instrument of Trust, and is generally known as Trust Deed.
It is well settled that no formal document is necessary to create a Trust as held in Radha Soami Satsung vs. CIT- (1992) 193 ITR 321 (SC). But for many practical purposes a written instrument becomes necessary under following cases –
When the trust is created by a will irrespective of whether the trust is public or private or it relates to movable or immovable property. This is because as per Indian Succession Act, a will has to be in writing
When the trust is created in relation to an immovable property of the value of Rs.100 and upwards, in case of a private trust. In case of public trusts, a written trust deed is not mandatory, even in respect of immovable property, but is optional.
Where the trust/association is being formed as a society or company, the instrument of trust; i.e., the memorandum of association, and Rules and Regulations has to be in writing.
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Instrument of trust A written trust-deed is always desirable, even if not required statutorily, due to
following benefits : a written trust deed is a prima facie evidence of existence of a trust ; it facilitates devolution of trust property to the trust; it clearly specifies the trust-objectives which enables one to ascertain
whether the trust is charitable or otherwise; it is essential for registration of conveyance of immovable property in
name of the Trust; it is essential for obtaining registration under the Income-tax Act and
claiming exemption from tax; it helps to control, regulate and manage the working and operations of
the trust; it lays down the procedure for appointment and removal of the trustee(s),
his/their powers, rights and duties; and it prescribes the course of action to be followed under any eventuality
including dissolution of the trust.
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Types of Instrument of Trust
Trust deed, where a trust is declared intervivos; i.e., by settling property under Trust.
A will, where a trust is declared under a will;
A memorandum of association along with rules and regulations, when the association/institution is being formed as a society under the Societies Registration Act, 1860.
A memorandum and articles of association where the association /institution is desired to be formed as a Company.
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Essentials of a valid Charitable or Religious Trust
There are four essential elements of a valid charitable or religious trust Charitable or Religious Object : The object or purpose of the
trust must be a valid religious or charitable purpose according to law ;
Capacity to create Trust : The founder or settlor should be capable of creating a trust and dedicating his property to that trust;
Certainty of Object and Dedication thereto : The settlor should indicate precisely the object of the trust and the property in respect of which it is made. The property should be dedicated to the trust and the owner must divest himself of the ownership of that property.
Concurrence with the law : The trust or its objects must not be opposed to the provisions of any law for the time being in force.
Provisions in the Income Tax Act, 1961 impacting Trusts- Brief overview Section 2(15)
Defines a charitable objective
Section 10(23C)Provides exemption to educational, medical, charitable and public religious institutions, existing not for the purposes of profit
Section 11-13Provides for tax treatment in case of charitable trusts
Section 80GDeals with deduction in respect of donations to certain funds , charitable institutions etc.
Section 161-164Deals with liability in special cases i.e. of representative assessee, which includes taxation of private discretionary trusts.
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Method of Computation of Income
Income from the properties of the trust have been held to be arrived at in the normal commercial manner without classification under the various heads set out in section 14 (CIT Vs. Rao Bahadur Calavala Cunnan Chetty Charities (1982) 135 ITR 485 (Mad)
Real income has to be taken into account for the purpose of considering the exemption u/s 11 (CIT Vs. Birla Janhit Trust (1994) 208 ITR 372, 375-76 (Cal)
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Method of Computation of Income
In that view of the matter, the loss incurred by the charitable trust on sale of investment is not allowable in computing the income of the trust because of the fact that such loss can not formed part of the real income of the trust. (Hindustan Welfare Trust Vs. Director of Income Tax (exemption) (1993) 201 ITR 564, 566
It may also be noted that where provisions of section 11 are attracted, the provisions of section 28(iii) cannot be invoked. [CIT Vs. South Indian Film Chamber of Commerce (1981) 129 ITR 22 (Mad)]
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Charitable Purpose as per Income Tax Act 1961
According to Section 2(15), ‘charitable purpose’, includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility.
Amendment made in A.Y. 2009-10
Proviso added
“Provided that the advancement of any other object of general public utility shall not be a charitable purpose , if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or any business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity”
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Charitable Purpose
Action flowing from charitable thought should not be for benefiting once own self. The action should always be for benefit of others.
[Sole Trustee, Lok Shikshana Trust v. CIT [1975] 101 ITR 234 (SC)]
The Court may disallow a project as being charitable even if the trust deed declares it to be so.
[All India Spinners Association v. CIT [1944] 12 ITR 482 (PC)]
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Charitable Purpose Inclusive Definition
The statutory definition is not exhaustive or exclusive. Even if the object or purpose may not be regarded as charitable in its popular signification as not tending to give relief to the poor or for advancement of education or medical relief, it would still be included in the expression “charitable purpose” if it advances an object of general public utility.
[CIT v. Andhra chamber of Commerce [1965] 55 ITR 722(SC)]
Concept of charity
The very concept of ‘charity’ denotes altruistic thought and action. Its object must necessarily be to benefit others rather than one’s self. The action which flows from charitable thinking is always directed at benefiting others. It is this direction of thought and effort and not the result of what is done in terms of financially measurable gain which determines that it is charitable.
[Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC)]
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Charitable Purpose
Relief for the poor
The relief in order to be charitable must, in every case, be to such section of the community, which may be well defined and identified by some common quality of public nature. If the class were vague and ill defined, the institution would not be a valid charitable trust.
The object need not be to benefit all persons living in a particular country or province. It is sufficient if the object is to benefit a section of the public as distinguished from specified individuals.
[CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC)]
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Charitable Purpose Education
As per wider and extensive meaning, the word ‘education’ would connote every acquisition of further knowledge. However section 10(22) of the I. T. Act, which grants exemption to the income of a ‘university or other educational institution, existing solely for educational purposes not for profit’ the word ‘education’ would connote the process of training and developing the knowledge, skill, mind and character of students by normal schooling.
[CIT Vs. Oxford University Press (Bom) 221 ITR 77] Education is the systematic instruction, schooling or training to the young in
preparation for the work of life. It also connotes the whole course of scholastic instruction, which a persons receives in the process of training and developing the knowledge, skill, mind and character of students by normal schooling
[Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC)]
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Charitable Purpose
The coaching of students in an institutions is not imparting education, which can be said to be a process of training and developing of students and character of students by normal schooling. A coaching institution cannot be said to be an institution where normal schooling is done. Coaching institute was held not to be entitled to exemption from Income Tax U/s 10(22) of the Act.
[Institute of Mining and Mines surveying Vs. CIT, (1994) 208 ITR 608 (Pat)] Education is per se regarded as an activity that is charitable in nature. The fee
structure must take into consideration the need to generate funds to be utilized for the betterment and growth of the educational institution, the betterment of education in that institution and to provide facilities necessary for the benefit of the students
[T.M.A Pai & Others vs. State of Karnataka & others]
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Charitable Purpose Medical relief
Hospital/Other Institution for the reception and treatment of persons suffering from illness or mental defectiveness or for reception and treatment of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit.
General public utility
An object of general public utility means an object of public utility, which is available to the general public as distinct from any section of the public. The expression “object of general public utility” includes all objects which promote the welfare of the general public. Therefore when the principal object of a chamber of commerce is to promote and protect trade, commerce and industry in India or any part of India, the said object can be said to be general utility and therefore a charitable purpose.
[CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC)]
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Charitable Purpose The State Bar Council is a body constituted for general public utility since the
advancement of any object beneficial to even a section of public as distinguished from an individual or group of individuals would be an object of public utility and consequently a charitable purpose.
[CIT v. Bar Council of Maharashtra [1981] 130 ITR (SC)] Society of Chartered Accountants being engaged in activities of general public
utility, is a charitable society.
[CIT v. Jodhpur Chartered Accountants Society [2002] 258 ITR 548 (Raj.)] Delhi Stock Exchange is non charitable institution.
[Delhi Stock Exchange Association Ltd. V. CIT [1997] 224 ITR 235] Where primary or dominant purpose of institution is charitable and other objects
which, by themselves, may not be charitable, but are merely ancillary or incidental to primary or dominant object, same would not prevent institution from validly being recognized as charitable trust.
[Director of Income Tax v. Bharat Diamond Bourse [2003] 259 ITR 280]
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Religious Purpose
It means a religious purpose within the meaning of the personal law applicable to the assessee.
[Bai Hirbai Rahim Trust v. CIT [1968] 68 ITR 821 (Bom)]
[Saraswathi Ammal v. Rajagopal Ammal, AIR [1953] (CS) 491] Starting and maintaining a Sanskrit Pathshala or a Dharamshala or a
temple accessible to the public, or a Sadabrata i.e food distributed to the public whoever may come and take it, or a piyau or kund where water was available to everybody, hospitals or other charitable or religious institutions are all charitable or religious purposes.
[Smt. Ganeshi Devi Rami Devi Charity trust v. CIT [1969] 71 ITR 696 (al)]
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Religious Purpose Holding and maintaining of samadhs in reverence of guru where
people at large come and pay homage and worship at the samadhs, also holding of mela at such samadhs to propagate and remind the people of the teachings of the guru in whose memory the mela is held.
[CIT v. Guryani Brij Balabh Kaur trust [1980] 125 ITR 381 (Punj.)]
[CIT v. Guryani Brij Balabh Kaur trust [1989] 178 ITR 615 (Punj.)] Provision of dinner to Brahmins on specified occasions is religious
purpose.
[CIT v. Ahmedabad Rana Caste Association [1973] 88 ITR 354 (Guj.)]
[CIT v. Ahmedabad Rana Caste Association [1983] 140 ITR 1 (SC)]
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Religious Purpose Public worship by itself will be a public religious object, but not if it is linked with
other objects like conduct of marriage, staging dramas.
[Ochira Temple Administration Board v. State of Kerala [1988] 171 ITR 429 (Ker.)]
Reciting prayers is a religious object but renovation of public hall for purposes of settlor will lose benefit.
[Court Receiver v. CIT [1964] 54 ITR 189 (Bom.)] Charities undertaken during religious occasions like Ramzan do not become
religious solely on this account.
[CGT v. Mecotronics Pvt. Ltd. [2000] 242 ITR 542 (Mad.)]
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Religious Purpose Ceremonies for repose of soul of founder and his wife alonwith other religious
objects cannot be treated as private because such ceremonies like ‘raogar’ and ‘muktad’ are for benefit of mankind.
[CWT v. Trustees of the J.P. Pardiwala Charity Trust [2965] 58 ITR 46 (Bom.)]
Section 13(1)(b) applied only to a charitable trust and not to a religious trust.. The test of this section will not be applicable to a religious trust who will, therefore, be entitled to exemption under Section 11(1)(a)
[Income tax Officer v. Catholic Church [1982] 13 TTJ 200(Ahd.)]
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Profit Motive Justice Bhagwati, who delivered the majority judgement of the Supreme Court in
the case of Sole Trustee, Loka Shikshana Trust (1975) 101 ITR 234, 256 observed that “But where the predominant object of the activity is to carry out the charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity.” In the same case the Ld. Judge observed that “it would indeed be difficult for persons in charge of a trust or institutions to so carry on the activity that the expenditure balances the income and there is no resulting profit. That would not only be difficult of practical realisation but would also reflect unsound principal of management”.
In CIT Vs. Thyaga Brahma Gana Sabha (Sri.) (1991) 188 ITR 160 (Mad.), the court held that the exclusionary clause does not require that the activity must be carried on in a such a manner that it does not result in any profit at all. Charitable purpose would not loose its character merely because some profit had arisen from the activity- Director of Income Tax (Exemption) vs. Shilpam (1998) 230 ITR 126 (Cal.)
Care in Drafting of main objects of a Trust
The objectives should be clearly defined.
Where a trust is formed and the trust deed does not reveal any specific object of a public, religious or charitable nature it shall not be entitled to claim exemption under the Act (Additional CIT Vs. Ganga Bai Charities (1983) 142 ITR 718 (Mad).
Where the deed of creation of the voluntary organization was not specific as regards the utilization of the income, the organization was not entitled to claim any exemption under the provisions of section 11 of the Act. (Assembly Rooms Vs. CIT (2000) 241 ITR 76 (Mad)
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Care in Drafting of main objects of a Trust
Objectives partly charitable
A trust created for providing benefit first for the relatives and balance amount for charities and after death of the relatives to the applied totally for charities was held not to have been formed for charitable purposes as the trustees had absolutely discretion to apply the income [Sarah Cherian Trust Vs. ITO (1987) 173 ITR 656 (Ker]
When there are several objects of a trust some of them being charitable and some non charitable, and if the trustee could have discretion in applying the trust income to any of the objects , whole of the trust must be treated as non charitable and no part of the income would be exempt from tax [South Indian Athletic Association Ltd. Vs. CIT (1975) 107 ITR 108 (Mad)]
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Care in Drafting of main objects of a Trust
Objectives partly charitable
Care should be taken as section 13(1) (c )(ii) also provides that any part of the income or any part of the property of the trust or the institution was during the previous year used or applied directly or indirectly for the benefit of the members or their relatives or any institution I in which the members have substantial interest, then the exemption shall not be available .
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Care in Drafting of main objects of a Trust
Beneficiaries should be properly defined.
It would be sufficient if the objects are for the benefit of a section of the public as distinguished from individuals. It may be noted that in order to become charitable, the relief should be for section of the community which could be well defined and identified by some common quality of public nature. If the class is not properly defined or is ambiguous , then the object will not be a valid charitable object. Refer decision in the case of Sherwani Charitable Trust Vs. CIT (1968) 79 ITR 750( All)
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Care in Drafting of main objects of a Trust
Scope and implication of general public utility
In Bar Council of Maharastra Vs. CIT (1980) 126 ITR 27 (Bom), these words were extensively debated. It was observed that word general pertained to a whole class. The word public denoted the body of people at large and the word utility meant usefulness . Therefore, advancement of any object beneficial to the public as distinguished from an individual or group of individual would be considered as charitable purposes.
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Care in Drafting of main objects of a Trust
Ancillary / incidental objects being not for a charitable purposes
Even in such case exemption will be available so long as these objects sub serve the main objects, which should be of religious or charitable nature – CIT Vs. Jaipur Charitable Trust (1976) 103 ITR 777 (SC)
Objects for carrying out business activity
The objects should be specified with the purpose of enabling the trust to carry on business. At the same time, it should be clear that the object of carrying out the business is only to subserve the main objects of carrying out charitable work.
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Income of Trust exempted under Section 11
Section Nature of income Extent to which exemption allowed
11(1)(a) Income derived from property held under trust wholly for charitable or religious purposes
To the extent income is applied to such charitable or religious purposes in India.
Whereas such income is accumulated or set apart for such application, to the extent of 15% of the income from such property.
11(1)(c) Income derived from property held under trust for a charitable purpose, which tends to promote international welfare in which India is interested
To the extent income is applied to such charitable or religious purposes outside India.
Exemption is available only if the Board has directed such exemption.
11(1)(d) Income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution.
100% exemption.
In computing the 15% of the income which may be accumulated or set apart, any such voluntary contributions as are referred to in Section 12 shall be deemed to be part of the income.
54
No exemption under Section 11
Section Nature & extent of income not exempt under Section11
13(1)(a) Income of private religious trust not used for public benefit.
13(1)(b) Income of charitable trust created for benefit for particular religious community.
13(1)(c) Income/ property of charitable or religious trust applied for direct or indirect benefit of person referred in 13(3)
13(1)(d) Any income, is taxable if
If any funds are invested other than in 11(5)
Any funds invested earlier than 1983 remain invested thereafter
Shares and company are held after 1983.
11(4A) Income from business which is not incidental to the attainment of the objectives of the trust, or in respect of which separate books of accounts have not been maintained.
12(2) Value of medial/ education services provided to specified persons by trust running hospital and educational institution shall be income of trust and will be chargeable in the year in which services are provided and chargeable to tax, despite section 11(1).
55
Conditions subject to which income derived from property held under trust is exempted under section11
Trust must have been created for any lawful purpose. The trust should not be created for the benefit of any particular religious community or caste.
The trust should be registered with the Commissioner of Income Tax under Section 12A
The property from which income is derived should be held under a trust by such charitable or religious trust / institution. The property should be held wholly for charitable purposes.
The exemption is confined to only such portions of the trust’s income which is applied to charitable or religious purposes or is accumulated for applying to such purposes in India.
85% of the income is required to be applied for the approved purposes and the unapplied income and the money accumulated or set apart (in excess of 15% of the income from such property) should be invested in the specified forms or modes.
No part of the income should ensure, directly or indirectly, for the benefit of the settler or other specified persons.
56
SECTION 10(23C) vs SECTION 11-13
Since section 10(23C)(iiiad) & (vi) provides for exemption only in case the educational institution exists for educational purposes, will this exemption be available to a society / trust running an educational institution as well as having income from other charitable objects as defined u/s 2(15)
An educational institution could be regarded as an educational institution if the society was running an educational institution. All the income of a society running a college would not be exempt under section 10(22). Only the income which has a direct relation or is incidental to the running of the institution, as such, would qualify for exemption. It is not the entirety of the income of the recipient, the trust in this case, but the income of the particular source, namely, the educational institution, that comes within the purview of sub-section (22) of section 10 of the Act
[Birla Vidhya Vihar Trust Vs. CIT (1981) 24 CTR (Cal) 307: (1982) 136 ITR 445 (Cal): TC32R. 734].
57
SECTION 10(23C) vs SECTION 11-13
LETTER OF MINISTRY OF LAW , JUSTICE & COMPANY AFFAIRS-DT 22-11-1983
The ministry in reference to a question as to whether the activities of an association or institution engaged in promotion of sports & games can , independently of the provision of S.23, be considered as enuring for charitable purposes within the meaning of S.2(15) of the IT Act.
It has opined that Section 10(23) & 11 are not inconsistent with each other and can operate simultaneously
58
Concept of ‘Corpus’ There is no judicial guidance on the subject as to what amount in the funds
of a trust will constitute its corpus.
According to Black’s Law Dictionary, it means “an aggregate or mass; physical substance, as distinguished from intellectual conception; the principal sum or capital, as distinguished from interest or income; the main body or principal of a trust.”
The corpus ingredient constituted of the originally donated or settled capital amount in the form of money, movable property or immovable property (which might conveniently be termed as original corpus) plus any contribution received by the trust with a specific direction that it shall form part of the corpus of the trust.
To claim a donation to be a corpus donation it is necessary that a written direction from donor is obtained.
59
Voluntary Contributions received by a Trust The voluntary contributions received by a charitable or religious trust are to
treated as follows: Corpus Donations
Voluntary contributions made to a charitable or religious trust with a specific direction that they shall form part of the corpus of the trust i.e corpus donations do not form part of the total income of the trust as per Section 11(1)(d).
Contributions other than corpus donationsSection 12(1) states that any voluntary contributions (not being corpus donations) received by a charitable or religious trust shall be deemed to be the income derived from property held under trust wholly for charitable or religious purposes. Such voluntary contributions would therefore be eligible for exemption under Section 11(1) provided the trust satisfies the conditions as prescribed under Section 11 and 13.
While corpus donations do not form part of total income, other voluntary contributions are exempt from tax as per Section 11 and 13
60
Voluntary Contributions received by a Trust Membership fees or subscriptions cannot be treated as voluntary contribution
as they are not the gratuitous payment by the member for any social purpose or a payment without any constitution.
[Trustee of Shri Kot Hindu Stree mandal v. CIT [1994] 209 ITR (Bom.)]
Where a trust received voluntary contribution with specific direction that it should form a part of the trust corpus, the trust will not loose exemption if the contribution is applied for meeting running expenses.
[Dharma Pratishthanam v. ITO [1985] 11 ITD 40 (Delhi)]
Where a charitable trust received donations from different donors who had specifically directed that the donations were to remain as corpus of the trust, the trust will not be precluded from using those receipts for making donations to other charitable trusts. Section 12 does not recognize such receipts as income of the trust for the purpose of Section 11.
[ITO v. Abhilash kumari Public Charitable Trust [1987] 28 TTJ 523 (Delhi)]
61
FORMS OF REGISTRATION
In India, various options of registration of an Organization are available. The most convenient & popular form of registration is under “The Societies Registration Act, 1860.”
An organisation can also be registered as a Trust under the Registration Act, 1908 OR
Section 25 company registered under the Companies Act, 1956
The above mentioned forms of registration are prevalent in India and one has to choose keeping in view the purpose and size of the organisation.
62
REQUISITES
1. REGISTRATION
2. DOCUMENTS TO BE FILED 3. NOTICE TO BE PUBLISHED IN NEWSPAPER
4. APPROVAL AND REGISTRATION5. ALTERATION OF MEMORANDUM 6. ANNUAL COMPLIANCES7. THE RIGHT AND LIABILITIES OF MEMBERS
63
Application of Income The exemption under Section 11 is available only if the income
derived from property held under trust is ‘applied’ to the charitable or religious purposes.
Income must be available for application. TDS cannot be considered as income. CIT V.Jayshree Charity Trust 1985 Tax LR 247 (Cal)
The application of income need not necessarily result in expenditure. Therefore, an amount irretrievably earmarked or allocated for the purposes of the trust or institution is also treated as applied even though it has not been actually spent.[CIT Vs. Trustees of the HEH Nizams Charitable Trust (1981) 131 ITR 497 (AP)]
Application need not necessarily result in revenue expenditure. Even capital expenditure is considered to be application of income for the purposes of Section 11if it is incurred for charitable purposes.[CIT v. Kannika Parameshwari Devasthanam & Charities [1982] 133 ITR 779 (Mad.)]
64
Instances of Application of Income Administrative expenses incurred for the purpose of carrying out objects and
purposes of the trust.
[CIT v. Birla Janhit Trust [1994] 208 ITR 372 (Cal.)]
Capital expenditure on purchase of a building to be utilized as a hospital for promotion of the charitable purpose.
[CIT v. S.Rm.M.ct.M. Tirupanni Trust Trust v. CIT [1998] 230 ITR 636 (SC)]
Deficit arising out of excess of expenditure over income during a particular year should be set off against surplus relating to subsequent year CIT Vs. Mahrana of Mewar Charitable Foundation (1987) 164 ITR 439 (Raj)
65
Instances of Application of Income Depreciation on various assets of the trust is deductible even if the cost of the
assets has been fully allowed as application of income in past years. [CIT v. Institute of banking Personnel Selection (IBPS) [2003] 131 Taxmann 396 (Bom.)]
Repayment of loans originally taken to fulfill objects of the trust. [CIT v. Jnambhumi Press Trust [2000] 242 ITR 457 (Kant.)]. However, the loan is returned , it should be treated as income of the organization in the previous year in which it is received. [CIT Vs. Kuchhi Menon Union (1985) 155 ITR 51 (Kar)]
Donation to other charitable trusts out of current year’s income. However, donation out of income accumulated or set apart is not treated as application of income and is taxed accordingly. [CIT v. Aurobindo Memorial Fund Society [2001] 247 ITR 93 (Mad.)]
66
Instances of Application of Income
Section 10(1) of the Act excludes agricultural income. Agricultural income will not form part of total income for the purpose of computing the accumulation of income in excess of 15% of the total income as laid down in sec 11- CIT V. Nabhinandan Digamber Jain(2002) 257 ITR 91(MP)
Application out of composite fund
In CIT Vs. Ashoka Charity Trust (1982) 135 ITR 556 (Cal), there existed a composite fund consisting of income from property held under trust and non includible voluntarily contributions. Out of such fund, the expenditure / application to charitable purposes existed the income received from property held under trust. The entire application was allowed and the contention of the AO to apportion such application on pro-rata basis disallowed.
Similarly, it has been held in the case of CIT Vs. Silk & Art Silk Mills Association Ltd. (1990) 182 ITR 38 that expenditure for the objects of the trust should be first deemed to have been made out of the assessable income and balance, if any , should be deemed to have come out of non-assessable income. In such circumstances pro-rata basis cannot be adopted.
67
68
Non Application Of Income Despite Extension Of Period-taxability Thereof
11(1B): Non utilization of income in case of clause (2)(a)(i) to explanation to section 11(1A).
11(1B)(a): Taxable in the year immediately following the previous year in which income was received.
11(1B)(b): Taxable in the year immediately following the year in which income was derived.
69
Conditions Of Accumulation
11(2): Accumulation of unapplied income.
11(2)(a): Application for accumulation upto 10 years.
11(2)(b): Accumulated income to be invested as per 11(5)
Proviso-1: Period of stay from court to be excluded in calculating 10 years.
Proviso-2: 10 years to be substituted 5 years in case of income accumulated after 1-4-2001.
Explanation: Accumulation for benefit of exempted institutions u/s 12AA and 10(23) shall not be treated as application.
70
Conditions of Accumulation
Section 11 (2) not to restrict operation of section 11(1) In the case of Addl. CIT Vs. A.L.N. Rao Charitable Trust (1995)
216 ITR 697 (SC), it is been held that accumulated income which is exempt under section 11(1)(a) need not be invested in Government Securities.
Belated Applications For Accumulation
CIRCULAR NO. 273
The board has passed a general order U/S 119(2)(b) – No.180/57/80-IT(AI) by which the CIT has been authorized to admit belated applications U/S 11(2) r/w r.17 of the IT rules if certain conditions are satisfied.
71
Taxability Of Accumulated Income – in which year?
11(3)(a): Applied for purposes other than charity or ceases to be accumulated or set apart for charity – taxed in such year of application.
11(3)(b): Ceases to be invested in 11(5) – taxed in year of cessation. 11(3)(c): Is not utilized for the purpose for which it was accumulated, by the
expiry of the year immediately following the period of accumulation – taxed in year immediately following expiry of period aforesaid.
11(3)(d): Is credited or paid to exempted trust – taxed in year of credit or payment.
72
Application To Change Purpose Of Accumulation
11(3A): In case of 11(2), if the income can not be applied for the purpose for which it was allowed to be accumulated, then an application can be made to change the purpose of accumulation.
Proviso1: The changed purpose can not be for payment to exempted trust.
Proviso2: Accumulated funds of dissolved trust can be credited or paid to exempted trust in the year the accumulating trust was dissolved.
73
Treatment of capital gains Section 11(1A) first caters to two main situations, viz.
where the capital asset is property held under a Trust wholly for charitable or religious purposes;
where the capital asset is held under a Trust in part only for such purposes
Within these main situations, the provision also caters to the following sub situations:
where the whole of the net consideration is utilized in acquiring the new capital asset;
where only a part of the net consideration is utilized for acquiring the new capital asset.
In respect of each of these sub-situations under the main situations, the section spells out the quantum of income which will be deemed to have been applied to charitable or religious purposes.
74
Treatment of capital gains
Income’, as defined under section 2(24), includes Capital Gains,. Therefore, for the purposes of section 11(1)(a), Capital Gains are also considered as a part of the income. Since, Capital Gains are also considered as a part of the income, therefore, they can be applied for charitable or religious purposes.
Under section 11(1A), if the entire amount of net consideration is invested in another Capital Asset then, the entire Capital Gain will be deemed to have been applied for Charitable or Religious purposes.
Under section 11(1A), if a part of the entire amount of net consideration is invested in another Capital Asset then, the appropriate fraction of the Capital Gain will be deemed to have been applied for charitable or Religious Purposes.
75
Treatment of capital gains
The Capital Gain have to be re-invested in another Capital Asset in the same year, unless the assessee exercises the option available under explanation to section 11(1), to apply the income in subsequent year.
Investment in fixed deposit is considered as an investment in Capital Asset. The CBDT instruction no. 883, dated 24.09.1975, specifies that, such fixed deposits should be for 6 months or more. But, various High Courts have held that, such 6 months time limit is legally not valid. The nature of asset is important and not the time frame.
No time limit has been provided under section 11(1A), for retention of the new asset. Under the prevailing provisions each year’s income and application are treated separately for the purposes of exemptions. Therefore, if the asset is held till the end of the relevant previous year and is disposed of in the subsequent year, then the exemptions cannot be denied nor can they be withdrawn in the next year.
76
Treatment of capital gainsIllustration 1 The following illustration clarifies the treatment of capital gains under section 11(1A).
Cost of the Asset Rs. 40,000/-
Sale Proceeds/Net consideration Rs. 1,00,000/-
Re-investment in Capital Assets (i) Rs. 80,000/-
(ii) Rs. 1,00,000/-
Solution 1
The computation of capital gain deemed to have been applied for the purposes of section 11(1)(a) is as under :
(i) Net consideration 1,00,000 1,00,000
(ii) Cost of the Asset 40,000 40,000
(iii) Capital gains 60,000 60,000
(iv) Investment in New Asset 80,000 1,00,000
(v) Shortfall in re-investment (i) - (iv) 20,000 Nil
(vi) Capital gains deemed to have been applied for charitable purposes (iii) - (v) 40,000 60,000
77
Business Income of a Trust
Section 11(4) provides that a business undertaking held by a trust will be treated as a property held under a trust.
Where a claim is made that the income of any business shall not be included in the total income, the AO shall have the power to determine the income of such undertaking in accordance with the provisions of the Act relating to the assessment. (i.e. as per Section 28 to 44 )
Where any income so determined is in excess of the income as shown in the accounts of the undertaking such excess shall be deemed to be applied to purposes other than charitable or religious purposes and thus, it will be liable to be taxed accordingly.
.
78
Business Income of a Trust
As per Section 11(4A), the income earned by a trust from any business activity shall be exempted from tax provided the following conditions are satisfied:
The business carried on is incidental to the attainment of the objects of the trust and
Separate books of accounts are maintained in respect of such business
It has been held in [CIT v. Thanthi Trust [2001] 247 ITR 785 (SC)], that a business whose income is utilized by the trust for the purpose of achieving the objectives of the trust is, surely, a business, which is incidental to the attainment of the objectives of the trust. In any event if there is an ambiguity, the provision must be construed in a manner that benefits the assessee.
79
Rental Income of a Trust
Rent derived from additions to trusts buildings is exempt from tax when rent was used for religious purposes.
The words applied is wider in import than the word expenditure. Expenditure means disbursement, paying out, distribution or spending. The money or amount will not go out irretrievably when it is applied to a purpose. The construction of the building was for the purpose of getting some income by way of rent and such income would be applied to the charitable or religious purposes. The purpose was sufficient for satisfying Section 11(1).
[CIT v. St. George Forana Church [1988] 170 ITR 62 (Ker.)]
80
Rental Income of a Trust
It has been held that letting of Dharamshala’s , auditoriums, running of libraries, etc. could not be considered as business activities and any income generated from such activities should be considered as income from properties held under trust . In CIT Vs.Ganesh Ram Laxminarayan Goel (1984) 147 ITR 468 (MP), it was held that letting out of dharamshala’s was an activity towards attainment of the objects of the organisation and profit making was not the profit motive and therefore it could not be considered as business activity.
81
Section 13 (1)(a)
The exemption under the head religious trusts has always been available only in respect of religious trusts which enure for the benefit of the public.
Where the trust is for private religious purposes, the exclusion did not and does not apply to that part of the income from property held under trust which does not enure for the benefit of the public.
[CIT v. Bengal Mills & Streamers Presbyterian Assn [1983] 140 ITR 586 (Cal.)]
82
Section 13(1)(b)
This section enacts that income of a trust or charitable institution created or established after 1.4.1962 for the benefit of any particular religious community or caste is not excluded from its total income.
In [CIT v. Shri Maheshwari Agarwal Marwari Panchayat [1982] 136 ITR 556 (MP)] it was held that since the trust was for a particular religious community, the provisions of section 13(1)(b) were not applicable as they apply only to charitable trusts. As per this interpretation, 13(1)(b) will not apply in case of religious or both Religious & charitable trusts.
83
Section 13(1)(c)
Where a part of income of the charitable or religious trust or institution enures or is used or applied, directly or indirectly, for the benefit of the settlor, founder and certain other specified persons is not eligible for exemption.
[Director of income tax v. Bharat Diamond Burse [2003] 259 ITR 280 (SC)]
84
Section 13(1)(d)
The income of any charitable or religious trust will not be entitled to exemption under section 11 or 12 if, for any period during the previous year:
Any funds of the trust are invested after 28.02.1983, otherwise than in any one of more of the forms specified in 11(5);
In [CIT v. ALN Rao Charitable Trust [1995] 216 ITR 697 (SC)], it was held that accumulated income which is exempt u/s 11(1)(a) need not be invested in the Govt. Securities; it is only in respect of any additional accumulated income beyond 15% that, if the assessee wants exemption of its additional accumulated income also, the assessee is required to invest the additional accumulated income in the manner laid down in section 11(5)
85
Anonymous Donations Anonymous donations of the following entities shall be included in the total
income u/s 115 BBC and taxed at the rate of 30%.
(i) any trust or institution referred to in section 11;
(ii) any university or other educational institution referred to in section 10(23C)(iiiad) and (vi) i.e. its annual receipts is less than or more than Rs. 1 crore;
(iii) any hospital or other institution referred to in section 10(23C) (iii a e) and (vi a) i.e. its annual receipts is less than or more than Rs. 1 crore;
(iv) any fund or institution referred to in section 10(23C)(iv); (established for charitable purpose)
(v) any trust or institution referred to in section 10(23C)(v). (established for public religious purposes or public religious & charitable purposes )
86
Anonymous Donations Anonymous donations not covered under section 115BBC
The following anonymous donations shall, however, be not be covered under section 115BBC:
(a) donations received by any trust or institution created or established wholly for religious purposes.
(b) donations received by any trust or institution created or established for both religious as well as charitable purposes (other than any anonymous donation made with a specific direction that such donation is for any university or other educational institution or any hospital or other medical institution run by such trust or institution.)
The term "anonymous donation" is defined to mean any voluntary contribution, where the person receiving such contribution does not maintain a record consisting of the identity of the person making such contribution indicating the name and address of the person and such other particulars as may be prescribed. Such anonymous donations will be taxed @ 30% (to be increased by surcharge as applicable and education cess.)
87
Birds eye view of provisions of section 11Income from permissible
business activity Section 11(4A)
Capital Gains Section 11(1A)
option to apply under section
11(1)(a) can also be exercised
Investment of the capital
gain in new capital assets
Income from property
held under trust including
voluntary contributions
Section 11(1)(a)
Income from property
partly held under trust,
for trust formed before
1.4.1962 Section11(1)(b)
Income from voluntary
contributions towards
corpus Section 11(1)(d)
< 85% applied > 85% applied
Total amount to be
accumulated being > 15%
Permission u/s 11(2) for
accumulation in excess of 15% Accumulation of income upto 15%
Accumulation for a period of 5 years only
Accumulation for indefinite period
Application after 5 years for charitable purposes
Mode of investment as specified u/s 11(5)
Mode of investment can be other than as u/s 11(5) to the extent the income remains invested in
business as per clause (iii) of the proviso to section 13(1)(d)
88
Legal Compliances Basis of differences Section 10(23C) Section 12 AA Section 80G
When is Application required to be made?
Required to be made by educational institutions where:
Gross annual receipt exceeds Rs. 1 crore; or
Is not substantially financed by the Government.
Required to be made by all NGOs in order to claim exemption u/s 11
Required to be made by all NGOs which wishes to take the benefit under this section
Form for the above Application
Form 56 D Form 10 A Form 10 G
Rules applicable 2CA 17A 11AA
Time limit for filing of application
Before the end of the previous year
Before the end of the previous year
NA.
Time limit for approval
Within 12 months from the end of the month in which application is received
Within 6 months from date of application
Within 6 months from date of application
Time period for exemption
Lifetime Lifetime Upto 5 Years
Withdrawal of approval
By CCIT By CIT N.A
89
Legal Compliances Basis of differences Section 10(23C) Section 12 Section 80G
Exemption w.e.f. The year in which it is granted and thereafter
The year in which it is granted and thereafter
AY as specified in order
Appeal on rejection Not provided Lies to Appellate Tribunal Lies to Appellate Tribunal
Form of Audit Report Form 10BB (Rule 16CC) Form 10B (Rule 17B)
Form of Application for accumulation
Not prescribed Form 10
Last date of filing of form for accumulation
Before the due date of filing of return u/s 139
Before the due date of filing of return u/s 139
Power to condone belated application
No No
Form for filing of return ITR 7 ITR 7
Note: In case of Private Trusts the Return has to be filed in ITR 5
90
Legal Compliances-Audit
Audit If the income of the trust before giving effect to exemption under Section
11 and 12 exceeds Rs. 50,000 then the accounts of such trust are to be audited and the audit report is to be furnished in the prescribed form (Form 10B)
For the purpose of computing aforesaid limit of Rs. 50,000, corpus donations will be included while incomes exempt under any provision other than Section 11 and 12 (e.g. Section 10) will not be included.
A charitable institution was registered under Section 12A(a). It was held that the AO was not justified in refusing benefit of exemption under Section 11 on the ground that trust had violated provisions of Section 12A(b) by not filing audit report in Form No. 10B along with its report of income.
[Calcutta Management Association v. ITO [1992] 42 ITD 62 (Cal.)]
91
Legal Compliances-12AA
Procedure for Application [Section 12AA] On receipt of an application for registration of a trust made under Section
12A, the Commissioner shall: Call for requisite documents or information from the trust or institution in
order to satisfy himself about the genuineness of activities of trust and may also make requisite enquiries in this behalf; and
After satisfying himself about the objects of the trust and the genuineness of its activities, he shall pass an order in writing registering the trust, or if he is not so satisfied, pass an order in writing refusing to register the trust. A copy of such order shall be sent to the applicant.
However, an order refusing to register the trust shall only be passed after the applicant has been given a reasonable opportunity of being heard.
Information to be submitted for 12AA
92
As per Form No. 10A, the following information needs to be submitted.Name & Address of founders / authors Date of creation of trust Name & address of trusteesCertified copy of instrument of trustCopies of accounts for last 3 years
93
Legal Compliances-80G Registration [Section 80G]
An application in triplicate in Form 10G should be filed with the CIT or DIT (Exemption), alongwith the following documents:
After receiving the application the CIT or DIT(E) may call for a report from AO and if he is satisfied that the conditions mentioned in 80G(5) (i) – (v) he will issue a certificate for allowing deduction u/s 80G to the donors making donations to the applicant trust for a period upto 5 years as may be ordered by him.
After expiry of the time for which the deduction u/s 80G is granted, a fresh application for renewal has to be made in the manner mentioned above.
Information to be submitted for 80G
94
As per Form No. 10G, the following information needs to be submitted.
Legal status of the institution/ fund Objects and geographical area of activities Name & Address of trustees Status of approval under 12A / 10(23) Status of last approval under 80G Change in objects if any since last approval Details of assessments, arrear taxes, accumulations Details of investments, business income, violations of section 13 etc. Notes on activities for last 3 years alongwith accounts.
95
Legal Compliances
Registration u/s 12A cannot be denied on the ground that the objects or the activities of the trust are of public religious purposes
[New Life in Christ Evangelistic Association v. CIT [2000] 246 ITR 532 (Mad.)]
W.e.f. AY 2000-01 a trust can be registered u/s 80G even if upto 5% of its total income of the PY is spent for religious purposes. However, upto AY 1999-2000, registration u/s 80G could be denied if one or more of its objects was wholly or substantially attributable to religious purpose.
[Upper Ganges Sugar Mills Ltd. V. CIT 227 ITR 578 (SC)]
96
Taxability of a Public Trust at a glance
Sources of Income Under Section
Tax Rates
Voluntary Contributions (being corpus donations) 11(1)(d) Exempt
Income not applied / accumulated to the extent > 15% 11(1)(a) AOP Rate
Income received on 31st March carried forward to next year for utilization but not utilized in that next year [Explanation 2(b) to Section 11(1)(d)]
11( 1B) AOP Rate
Income accumulated u/s 11(2) is not invested / utilized / donated to another trust
11(3) AOP Rate
Excess Business Income as assessed by the AO 11(4) AOP Rate
Income derived u/s 13(1)(a) & 13(1)(b) AOP Rate
Income derived u/s 13(1)(c) & 13 (1)(d) MMR
Anonymous Donations u/s 115BBC 30%
97
Taxability of Public TrustTaxability of Public trusts
Income is not exempt u/s 11 or 12
Section 164(2)
Exemption u/s 11 or 12 is forfeited
due to contravention u/s 13(1)(c) or 13(1)(d)
Section 164(2)
Taxable at the rates applicable in
case of AOPTaxable at the Maximum Marginal rate
98
Tax rates applicable to Public Charitable or Religious Trust
Where income is not exempt under section 11 or 12 [Section 164(2)]
Taxable at the rates applicable in case of an AOP
Where exemption under Section 11 or 12 is forfeited due to contravention under Section 13(1)(c) or 13(1)(d) [Section 164(2)]
Such income is taxable at maximum marginal rate.
However, in the case where the assessee is not entitled to exemption under Section 11 or 12, by virtue of the provisions contained in Section 13(1)(b), the maximum marginal rate does not become applicable. The income will then be charged on rates specified for an association of persons as provided under Section 164(3)
[ITO v. Gurjar Pushkarna Vidyotejak Mandal [1988] 30 TTJ 610 (Ahd.)]
99
Tax rates applicable to Public Charitable or Religious Trust
A trust will attract MMR of tax only on that part of the income which has forfeited exemption under the above circumstances and not on the entire income of the trust.- Director of Income tax ( Exemption) V. Sheth Mafatlal Gagalbhai Foundation Trust (2001) 114 Taxmann 19 ( Bom)
In Gurdayal Berlia Charitable Trust V.fifth Generation Trust v. fifth ITO (1990) 34 ITD 489, Bombay, the tribunal observed that only the income from unapproved investment would be Taxable at MMR.
100
Taxability of Private TrustTaxability of Private trusts
Shares of beneficiaries are determinate [Section 161] Shares of beneficiaries are indeterminate [Section 164(1)]
Where income does not
include business profits
Where income does not
include business profits**
Where income
includes business profits
Where income
includes business profits
The trustee is assessable
at the rates applicable
to each beneficiary
The whole of the income
of the trust is taxable at
Maximum Marginal Rate
The whole of the income
of the trust is taxable at
Maximum Marginal Rate
The income of the trust is
Taxable in the hands of
trustees at the rates
Applicable to an AOP
** Note: Subject to conditions as specified in the following slides
101
Taxability of a Private trust
Where shares of beneficiaries are determinate or known (Section 161)
Where income does not include business profits [Section 161(1)]The trustee is assessable at the rates applicable to each beneficiary.
Where income includes profits from business [Section 161(1A)]The whole of the income of the trust is taxable at maximum marginal rate.
However, if such profits from business are receivable under a trust declared by any person by ‘will’ exclusively for the benefit of any relative, dependant on him for support and maintenance and such trust is the only trust so declared by him, then, the trustees shall be assessable at the rates applicable to each beneficiary.
102
Taxability of a Private trust Where shares of beneficiaries are indeterminate or unknown i.e. in case of
discretionary trust [Section 164(1)] Where income does not include profits from any business and if:
None of the beneficiaries has taxable income exceeding maximum amount not chargeable to tax or is a beneficiary in any other trust; or
The income is receivable under a trust declared by any person by will and such trust is the only trust so declared by him; or
The income is receivable under a non testamentary trust created before 1.03.1970 exclusively for the benefit of relatives of settlor, or member of HUF, who are mainly dependant upon settlor; or
The income is receivable by trustees on behalf of a provident fund, superannuation fund, gratuity fund, pension fund or any other bona fide fund created by the employer carrying on business or profession for the benefit of his employees,Then, income of the trust is taxable in the hands of trustees at the rates applicable to an AOP. In any other case, income is taxable at the maximum marginal rate.
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Taxability of a Private trust Where shares of beneficiaries are indeterminate or unknown i.e.
in case of discretionary trust [Section 164(1)]
Where income includes business profits:
The whole of the income of the trust is taxable at the maximum marginal rate.
However, if such profits from business are receivable under a trust declared by any person by ‘will’ exclusively for the benefit of any relative, dependant on him for support and maintenance and such trust is the only trust so declared by him, then, the trustees shall be assessable only at the rates applicable to an AOP.
NGO- DEFINITION
As per World Bank-Private Organizations that pursue activities to relieve suffering, promote the interest of poor, project the environment , provide basic social
services or undertake community deployment
NGOs are mainly engaged in religious, education / medical related services, community services
Also known as NPOs, NFPOs, VOs, VDOs, NGDOs, also Government promoted GONGOS,
NGOs- Organisational Structure
NGO
PEOPLE
DONORS
GOVT.
BENEF.ORGANISATIONGENERAL BODY
GOVERNING BODYEXECUTIVE TEAM
NGO-NATURE
NGOs are Societies registered under Societies Registration Act 1956, Central or Respective state act or
Public Trusts registered under Indian Trust Act 1882 or
Section 25 Companies or
Mutually Aided Cooperative society Or
Self Help Groups
NGOs – Some Facts
There are around 1.2 million NGOs.
Employ nearly 20 million persons on paid or volunteer basis
Main source of receipt are Government/ International Grants, Donations, Self Generated funds.
Nearly 60% of NPOs are engaged in religious education and community related services.
Estimated more than 5000 cr coming from Foreign sources.
NGOs – Areas of work in NGOs
Statutory and Internal Auditors and Tax Auditor if doing business like book shop or pharmacies
Auditors on behalf of Donor or other funding agencies
Advisor on Financial Management
Finance Manger / CFOs
Senior Management Team Member/ CEOs
Member of Advisory Board, Governing Body
NGOs – As Statutory/ Internal Auditor
There are separate audit procedures under Society Registration Act , Indian Trust Act , Companies Act 1956 , Mutually Aided Cooperative Society, Income Tax Act and FCRA.
Audit Under I.T.Act-If total income exceeds 50000 audit u/s 12A(b).Audit Report in Form 10B.Here CA may suggest about application of income , accumulation of income, investment of funds, filling application for accumulation of funds.
Audit under FCRA-Audit by organization receiving foreign contribution. U/r 8(2) FCRR 1976.Audit Report in Form FC3
Audit as per agreement-It may contain various provisions like purpose of grants, manner of utilization, time frame
In some case Special Purpose Audit also.
NGOs-AUDIT ON BEHALF OF DONOR OR OTHER FUNDING AGENCIES
NGOs-What is income
Section 2(24)(iia)-Income includes voluntary contribution received by religious trusts etc.
Main source of income are donations , voluntary contributions, subscriptions fees, capital gains, PGBP, income from property held under trust, and corpus donations.
Section 2(24)(iia) read with section 12- Corpus donations with a specific instruction that this donations shall form part of corpus of trust – not to include in income.
NGOs-Accounting Aspects
Para 13 of AS 12-Accouting for Govt Grants – Grant should not be recognized as income until there is a reasonable assurance that (1) Complying of conditions (2) Grant will be received. AS 12 not applicable on NGOs. Still same principal should be followed.
Grant Recognized as Income.
Grant Recognized as Liability
Grant Recognized as income to the extent it is expended
NGOs – Applicability of AS
According to the opinion given by ASB In 1995
AS are applicable to on Commercial , Industrial and business enterprises whether profit oriented or for charitable purposes .
Applicable even if small activities are commercial / industrial/business in nature.
Except AS-3,AS-17, AS-18, AS-23,AS-27,all other AS are applicable.These AS are though not mandatory though ought to be followed
NGOs- Some Issues Under I.T.Act-Depreciation-
Depreciation allowed even if whole of the amount incurred on capital expenditure is allowed u/s 11.(DIT (Exemption) Vs Franjee Cawasjee Institute (1993) 109 CTR (Bom) 463
Income chargeable under H/P-Deprecations Allowable(CIT Vs Sheth Manilal Ranchhoddas Vishram Bhawan Trust (1992) 198 ITR 598 (GUJ)
FBT payable by NGOs if not having Reg U/s 12A or eligible for exemption u/s 10(23C)
NGOs- Some issues under FCRA
Foreign Source-Section 2(e)
Indian Citizens Living Abroad-Donations from them not from foreign source unless such person has foreign citizenship. Period of stay is irrelevant. So his contribution will be from Indian sources if he has no foreign citizenship.
Contributions from companies of foreign countries-Foreign Sources. Contributions from Subsidiaries of Foreign companies formed in India – Foreign Sources.
NGOs- Some Issues under FCRA
All NGOs receiving FC to received clearance from Ministry Of Home Affairs.
Permission not needed- Gift not exceeding 8000 per annum. Salary , wages or other remuneration for business
purposes Payment for International trade or business transacted
outside India. By way of gift or presentation received as member of any
Indian Delegation
NGOs – Some Issues under FCRA-Salient features of FC(M&C)Bill 2005
Yet to pass
Registration valid for 5 years.
Restriction on Administrative expenses up to 30% of FC
Re-Registration of already registered societies within 2 years.
Provisions for suspension and cancellation of registration certificates.
Prohibitions on transfers of FC to other persons.
NGOs-Scope of work -Registration and Re- Registraions
Application in Form FC-8 for regular registration and Form FC-1A for prior permission along with supporting documents. Section 6 of FCRA
Office of I.B.visit , inspect accounts, ask questions, inquire local police station .Confidential report to FCRA deptt.
Permission or rejection within 90 days. Opportunity
Application for reregistration.Or appel in HC within 60 days.
Application for prior permission more than once allowed if required
If Registration is allowed separate bank account as given in application would be opened and operated
NGOs-FCRA-Returns
Annual Return with Balance Sheet etc in duplicate duly certified by CA giving details of receipt and utilisation of Foreign Receipt.Return with Form FC-3 upto 31st July every year to Sec,MHA.New Delhi
In this regard CA to certify
B/F FC at the beginning of the year
FC received
Unutlised FC
Maintenace of accounts as per S-13 and Rule 8(1)
Disclamer clause-That information furnished in this certificate and B/S and R/P is correct
NGOs- Implication of Service Tax-VAT
If service covered under S-65(105) are provided than ST is payable . Credit is allowed as in other cases also.
Pathological Labs run by NGOs are not liable to ST under head Testing and Analysis Services.
If doing business than VAT is payble .Can take credit is allow
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Audit of Provident Fund
Trusts
AUDIT OF PROVIDENT FUND TRUSTS
• Introduction• Formation of PF Trusts
• Audit of PF Trusts• Recent Changes and Challenges
Introduction
What is a Provident Fund ?
It is a mandatory, tax-qualified, defined, contribution retiral benefit plan wherein equal contribution
at the specified rateis made by the employer and the employee and the same is payable in lump sum on retirement.
Introduction
Relevant Statutes are :
Employees Provident Fund & Miscellaneous Provisions Act, 1952
Income Tax Act,1961 Provident Fund Act, 1925 Indian Trusts Act, 1882
IntroductionFollowing three Schemes framed under the EPF & MP Act, 1952:
Employees’ Provident Fund Scheme, 1952
- came into force from 1st November, 1952
Employees’ Family Pension Scheme, 1971
- came into force from 1st March 1971
Later replaced by Employees’ Pension Scheme, 1995
with effect from 16th November, 1995
Employees’ Deposit Linked Insurance Scheme, 1976
- came into force from 1st August, 1976
Formation of PF Trusts
Options
Total Compliance with RPFCCovered Trust for All MembersExcluded Trust for Excluded Employees with Approval under Schedule IV part A of the Income Tax Act, 1961
Trusts for Both Covered and Excluded Employees
Formation of PF TrustsDefinition :"Excluded Employee"
an employee of the Company to whom both of the following two conditions apply at the time of the coverage of the Company under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 or at the time of his joining the services of the Company, whichever is later.
i His pay at the relevant time is more than Rs 6500/- per month.
ii He does not have any current PF Balance.
Formation of PF Trusts An Excluded Employees' Trust is one,
which does not come under the purview of the PF Department, but its policies are framed based on the PF Act.
The regulatory Statute is the Income Tax Act, 1961. The rate of contribution by the member can be any
amount not exceeding his basic salary including DA (if any)
The employer can decide to contribute any amount up to 12%. Employer contribution above 12% is taxable in hands of employees
Employee Contributions eligible for Sec. 88 rebate / 80C Deduction Interest on Employer and Employee contributions are tax free
However, withdrawls before completion of 5 years of membership, become taxable in year of withdrawal with condtitions.
Formation of PF Trusts
Apart from the financial benefits, some very important benefits become available to employees
who are members of voluntary PF Trusts in comparison to the unexempted establishments :
• Easy Availability of advances• No hassles of Dealing with Public
Departments• Availability of Refundable advances• Faster transfer of accumulations for
outgoing members• Faster settlement of final dues
Formation of PF TrustsCoverage Establishments employing 20 or more persons and engaged in
any of the 177 industries / Businesses specified. Co-operative Societies, employing 50 or more persons &
working without the aid of power. Establishments not coverable statutorily can opt for coverage. An establishment continues to be covered under the Act,
irrespective of fall in the employment strength. Since the Act applies on its own force to the establishments,
the employers are required to file the particulars in the specified format for registration and allotment of business number.
Formation of PF Trusts
When can a company opt to set up an Exempted Trust ?
Covered under the provisions of the PF &MP Act, 1952
Profit making Company 20 employees Pass a Board Resolution File for exemption with the RPFC Apply to the CIT for recognition of PF Trust
On receipt of the approval from RPFC the Trust can comply as “Exempt”
Cost BenefitsCost BenefitsParticulars Un-exempted
Establisment (%)
Exempted Emp- loyees Trust
(%) Administration
Charges 1.10 Nil
Inspection charges
Nil 0.18
EDLI Charges 0.50 0.50
EDLI Administration
Charges
0.01 0.01
Total Cost 1.61 0.69
Formation of PF Trusts
EPS deduction, to be paid to the RPFC cannot be made from the Employee's contribution.
The EPS deduction of 8.33% can be made only from the employer's contribution of 12% of Basic and DA.
This is capped at Rs.6500/-
AUDIT OF PROVIDENT FUND TRUSTS
Contributions: Statutory rate of contribution is 12% of emoluments
(basic wages, dearness allowance, cash value of food concession and retaining allowances if any,) in the case of 177 establishments.
Rate of contribution shall be 10% in case of the following:Brick, beedi, jute, guar gum factories, coir industry other than spinning sector.
Establishments declared as sick undertakings by BIFR. Matching contribution is to be collected from the employees Out of 12% (or 10% as the case may be) of the employer’s
share of contribution, 8.33% is to be remitted towards pension fund.
Employer is also required to pay a contribution of 0.5% of the emoluments towards EDLIS’1976.
AUDIT OF PROVIDENT FUND TRUSTS
Specifics :• Interest Payment• Investment Pattern • Valuation of Securities & Amortisation of Premium• Settlements during the year• Advances / Loans• Meetings• Submission of Returns• Health of Securities
AUDIT OF PROVIDENT FUND TRUSTSThe Rate of Interest declared by EPFO for FY 2003-04 and FY 2004-05 on PF contributions is 9.5% p.a.
An Exempted Trust cannot credit interest less than the statutory rate of interest stipulated even if the Trust is not able to earn the minimum interest.
In case of a shortfall, the Company has to make good the deficit.
However, An Excluded Employees' Trust / Private Trustmay declare interest based on the earnings of the Trust.
Investment Pattern prescribed for Provident Fund Trusts effective April 1, 2003
25%
15%
30%
30%
Central GovtState Govt.PSUFlexible
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AUDIT OF PROVIDENT FUND TRUSTS
Effective April 1, 2005, vide Circular no F.No. 5(53)/2002-ECB&PR
Dated: January 24, 2005
The Trustees, subject to their assessment of the risk-return prospects, may, if they so decide, divide the total portfolio under Central and State Government categories into tradable and non-tradable categories.
Upto 10% of the total portfolio at the end of the preceding financial year can be treated as tradable and may be used for active management.
AUDIT OF PROVIDENT FUND TRUSTSProvided that the tradable portfolio of Government securities
shall be marked to market and mutual funds, which have been set up as dedicated funds for investment in Government securities, shall be valued at Net Asset Value at the close of the financial year.
Flexible portion being 30% may be invested in any of the three categories as decided by their Trustees
Investment may be made in Shares of companies that have an
investment grade debt rating from at least two credit rating agencies 5%
AUDIT OF PROVIDENT FUND TRUSTS
Valuation of Securities & Amortisation of Premium :Guidelines in AS 13 cannot apply to PF Trusts
Cost Face ValueCost or Market Value whichever is lower
Amortise Premium but not discount
AUDIT OF PROVIDENT FUND TRUSTS
Amortise Premium but not discount Income exempt
Hold till maturityTrade
Valued at lower of cost or market value
AUDIT OF PROVIDENT FUND TRUSTSSettlements during the yearA member may completely withdraw the amount that has accrued in
his account if: He retires at the age of 58. He retires – god forbid – because of permanent and total
debilitation. This could be either mental or physical, but must be ‘permanent and total’ -- the scheme distinguishes between partial and total disabilities.
He immigrates or takes up employment abroad. His services are terminated because of retrenchment in the
company. He chooses to terminate his service under a voluntary retirement
scheme. The establishment he works for shuts down. The organisation he works for shuts down, and he joins one that
does not participate in the EPF scheme. He can withdraw up to 90 per cent of the amount in his credit in the
year before he retires -- that is, between the ages of 57 and 58.
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AUDIT OF PROVIDENT FUND TRUSTSIf an employee brings in a transfer from another approved Provident Fund Trust or RPFC
then the service rendered with such an ex-employer is counted.
Settlement can be done only after a waiting period of two months from the date of resignation
For members going abroad, settlements can be done immediately
Settlements are immediate in case of female members who resign from the services for the purpose of getting married.
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AUDIT OF PROVIDENT FUND TRUSTSTDS on settlements Any payment received from a Statutory Provident Fund,(i.e. to
which the Provident Fund Act, 1925 applies) is exempt. Any payment from any other provident fund notified by the Central
Govt. is also exempt. The Public Provident Fund(PPF) established under the PPF
Scheme, 1968 has been notified for this purpose. Besides the above, the accumulated balance due and becoming
payable to an employee participating in a Recognised Provident Fund is also exempt to the extent provident in Rule 8 of Part A of the Fourth Schedule of the Income Tax Act.
There is no tax deduction if the member has put in five years of continuous service with the employer (includes period of past membership with previous employer/s if there is a transfer received). Otherwise, the member is liable for deduction of tax
AUDIT OF PROVIDENT FUND TRUSTSAdvances / Loans from provident fund corpus: To buy life insurance policies. To buy land, or to build or buy a house. To repay any loans that he has taken to buy or build a
house. To finance the treatment or hospitalisation of self or
any member of the family. To finance the weddings or college expenses of his
children. In special cases, where the establishment he works for
is temporarily shut down, or if his services have been terminated and he has challenged that termination in court.
Loans are to be utilized for purpose else provision to add back to income
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AUDIT OF PROVIDENT FUND TRUSTS
Meetings : to be held once in a calendar quarter
Section 17(1A)(d) of EPF&MPAct, 1952
The Board of Trustees constituted shall :(i) maintain detailed accounts (ii) submit returns to the RPFC(iii) invest the provident fund monies (iv) transfer provident fund account of any employee(v) perform such other duties as may be specified
AUDIT OF PROVIDENT FUND TRUSTS
Submission of Returns
EPF&MP Act
IT Act
AUDIT OF PROVIDENT FUND TRUSTSHealth of Securities State wise exposure
12.3020.51
82.93
0102030405060708090
Rupe
es in
Lac
s
States
PSU exposure
0
20
40
60
80
100
120
140
160
Rupe
es in
Lac
s
Public Sector Units
271.50
87.8661.37 10.25
050
100150200250300
Rupe
es in
Lac
s
Rupees in Lacs
Sector
Sector wise exposure
Redemption of Investments at maturity
140.00
20.56
213.41
22.06
81.44
65.40
105.28
45.14
0.87
0
50
100
150
200
250
Rupe
es in
Lac
s
1 Y
EA
R
2 Y
EA
RS
3 Y
EA
RS
7 Y
EA
RS
8 Y
EA
RS
10 Y
EA
RS
11 Y
EA
RS
15 Y
EA
RS
24 Y
EA
RS
Period of redemption
Rating Profile Analysis
87.86
40.86
20.51
83.80
7.00
190.95
263.18
0
50
100
150
200
250
300A
mou
nt in
Lac
Rs.
A A- A+ AAA ASO UNRATED SOV
Rating
Recent Changes …..and Challenges
Auditors change in two years Investment Pattern opened up Rate of Interest Accounting Standards Valuation of Investments FBT – SAF
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AUDIT OF PROVIDENT FUND TRUSTS
Anamolies :
No authentic data available,however,
Rs 1,40,000 crore with RPFCRs 1,40,000 crore in private trusts
Presented By CA Swatantra Singh FCA, MBA Email ID: [email protected]
New Delhi, (India) 9811322785
www..carajput.com