Amendment of section 11.
7. In section 11 of the Income-tax Act,––
(A) in sub-section (1),––
(a) in Explanation 1, in clause (2), in sub-clause (ii), in the long line, for the words “before the expiry of the time allowed”, the words “at least two months prior to the due date specified” shall be substituted;
(b) in Explanation 4,––
(I) in clause (i),––
(a) in the proviso, for the words “deposit; and”, the word “deposit:” shall be substituted;
(b) after the proviso, the following provisos shall be inserted, namely:––
“Provided further that provisions of the first proviso shall apply only if there was no violation of the conditions specified––
(a) in clause (c) of this sub-section;
(b) in Explanations 2, 3 and 5 of this sub-section;
(c) in the Explanation to this section; and
(d) in clause (c) of sub-section (1) of section 13,
at the time the application was made from the corpus:
Provided also that the amount invested or deposited back shall not be treated as application for charitable or religious purposes under the first proviso unless such investment or deposit is made within a period of five years from the end of the previous year in which such application was made from the corpus:
Provided also that nothing contained in the first proviso shall apply where application from the corpus is made on or before the 31st day of March, 2021;”;
(II) in clause (ii), after the proviso, the following provisos shall be inserted, namely:––
“Provided further that provisions of the first proviso shall apply only if there was no violation of the conditions specified––
(a) in clause (c) of this sub-section;
(b) in Explanations 2, 3 and 5 of this subsection;
(c) in the Explanation to this section; and
(d) in clause (c) of sub-section (1) of section 13,
at the time the application was made from loan or borrowing:
Provided also that the amount repaid shall not be treated as application for charitable or religious purposes under the first proviso unless such repayment is made within a period of five years from the end of the previous year in which such application was made from loan or borrowing:
Provided also that nothing contained in the first proviso shall apply where application from any loan or borrowing is made on or before the 31st day of March, 2021; and”;
(III) after clause (ii), the following clause shall be inserted with effect from the 1st day of April, 2024, namely:––
“(iii) any amount credited or paid, other than the amount referred to in Explanation 2, to any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or subclause (vi) or sub-clause (via) of clause (23C) of section 10, as the case may be, or other trust or institution registered under section 12AB, as the case may be, shall be treated as application for charitable or religious purposes only to the extent of eighty-five per cent. of such amount credited or paid.”;
(B) in sub-section (2), in clause (c), for the words “on or before”, the words “at least two months prior to” shall be substituted;
(C) in sub-section (7), with effect from the 1st day of April, 2024,––
(a) for the words, brackets and figures “and clause (46)”, the words, brackets, figures and letter “, clause (46) and clause (46A)” shall be substituted;
(b) in the first proviso, for the words, brackets and figures “under clause (46)”, the words, brackets, figures and letter “under clause (46) or clause (46A)” shall be substituted;
(c) in the second proviso, for the words, brackets and figures “under clause (46)”, the words, brackets, figures and letter “under clause (46) or clause (46A)” shall be substituted.
Notes on Clauses:
Clause 7 seeks to amend section 11 of the Income-tax Act relating to income from property held for charitable or religious purposes.
It is proposed to amend clause (2) of Explanation 1 of sub-section (1) of the said section to provide that option by the person under the said Explanation shall be exercised at least two months prior to the due date specified under sub-section (1) of section 139 for furnishing the return of income.
It is further proposed to insert a second proviso to clause (i) of Explanation 4 of subsection (1) of the said section so as to provide that the provisions of the first proviso shall apply only if there was no violation of the conditions, specified in
(a) clause (c) and those specified in Explanations 2, 3 and 5, of the said sub-section; and
(b) in the Explanation to the said section; and
(c) in clause (c) of sub-section (1) of section 13,
at the time the application was made from the corpus.
It is also proposed to insert a third proviso to clause (i) of the said Explanation 4 so as to provide that the amount invested or deposited back shall not be treated as application for charitable or religious purposes under the first proviso unless such investment or deposit is made within a period of five years from the end of the previous year in which such application was made from corpus.
It is also proposed to insert a fourth proviso to clause (i) of the said Explanation 4 so as to provide that nothing contained in the first proviso shall apply where application from the corpus is made on or before 31st March, 2021.
It is also proposed to insert a second proviso to clause (ii) of the said Explanation 4 so as to provide that the provisions of the first proviso shall apply only if there was no violation of the conditions specified in
(a) clause (c) and those specified in Explanations 2, 3 and 5, of the said sub-section;
(b) in the Explanation to the said section; and
(c) in clause (c) of sub-section (1) of section 13,
at the time the application was made from loan or borrowing.
It is also proposed to insert a third proviso to clause (ii) of the said Explanation 4 so as to provide that the amount repaid shall not be treated as application for charitable or religious purposes under the first proviso, unless such repayment is made within a period of five years from the end of the previous year in which such application was made form loan or borrowing.
It is also proposed to insert a fourth proviso to clause (ii) of the said Explanation 4 so as to provide that nothing contained in the first proviso shall apply where application from any loan or borrowing is made on or before 31st March, 2021.
These amendments will take effect from 1st April, 2023 and will, accordingly, apply in relation to the assessment year 2023-2024 and subsequent assessment years.
It is also proposed to insert clause (iii) in Explanation 4 to sub-section (1) of the said section to provide that any amount credited or paid, other than the amount referred to in Explanation 2 of the said sub-section, to any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in subclause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, as the case may be, or other trust or institution registered under section 12AB shall be treated as application for charitable or religious purposes only to the extent of eighty-five per cent. of such amount credited or paid.
This amendment will take effect from 1st April, 2024 and will, accordingly, apply in relation to the assessment year 2024-2025 and subsequent assessment years.
It is also proposed to amend clause (c) of sub-section (2) of the said section so as to provide that the statement of accumulation shall be furnished at least two months prior to the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year.
This amendment will take effect from 1st April, 2023 and will, accordingly, apply in relation to the assessment year 2023-2024 and subsequent assessment years.
Sub-section (7) of the said section, inter alia, provides that where a trust or an institution has been granted registration under section 12AA or section 12AB and the said registration is in force for any previous year, then, nothing contained in section 10 other than clause (1) or clause (23C) or clause (46) of section 10, shall operate to exclude any income derived from the property held under trust from the total income of the trust or institution for that previous year.
Consequential to insertion of clause (46A) in section 10, it is proposed to give reference of the said new clause in the said sub-section (7) and in the first and second provisos thereof.
This amendment will take effect from 1st April, 2024 and will, accordingly, apply in relation to the assessment year 2024-2025 and subsequent assessment years.
