TMI BlogCircular under section 119 of the Income-tax Act, 1961 - Conditions under which income from specific funds, trusts, institutions, universities, educational, or medical institutions can enjoy tax exemption under the Income-tax Act, 1961. - Illustrated by example.X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 of the Income-tax Act, 1961 (the Act) (hereinafter referred to as the first regime) or any trust or institution registered u/s 12AA or 12AB of the Act (hereinafter referred to as the second regime) is exempt, subject to the fulfilment of certain conditions provided for the two regimes in the Act. These conditions inter-alia include the following for the entities (hereinafter referred to as trust 1 institution in the two regimes):- (a) at least 85% of income of the trust/institution should be applied during the year for the charitable or religious purposes; (b) Trusts or institutions are allowed to apply mandatory 85% of their income either themselves or by making dona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AB , 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) clause (iii) in Explanation 4 to sub-section (1) of section 11 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 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 , as the case may be, shall be treated as application for charitable or religious purposes only to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Trust 2 Trust 3 1. Income (A) 300 100 100 2. Income which is required to be applied (B = 85% of A) 255 85 85 3. Application of income 4. Donation to other trusts under the first or second regime (C) 100 100 Nil 5. Amount to be considered as application of income against the donations at row no. 3 [as per clause (iii) of the Explanation 2 to third proviso to clause (23C) of section 10 or clause (iii) of the Explanation 4 to sub-section (1) of section 11 of the Act]. (D = 85% of C) 85 85 6. Balance income for application (E =A-C) 200 Nil 100 7. Application other than Sl. No. 4 (F=85% of E) 170 Nil 85 8. Remaining income which may be accumulated without Form No. 10 / 9A (G=15% of E) 30 Nil 15 9. Funds required to be invested in section 11 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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