A public charitable trust engaged in "Relief of Poor" and registered under section 12AB, for the previous year ending 31.3.2026, derived gross…

CA Final · Direct Tax Laws and International Taxation · MTP · May 2026
A public charitable trust engaged in "Relief of Poor" and registered under section 12AB, for the previous year ending 31.3.2026, derived gross income of 114.50 lacs, which consists of the following: Particulars Amount in ₹ Income from properties held by trust 1,10,00,000 Accrued Interest on FDR [FDR was made in financial year 2023-24 for investment under section 11(5) with regard to amount set apart in terms of Section 11(2)] 4,50,000 During the financial year, the trust applied the following sum towards charitable purposes, as per the objects of the trust: Electricity bill amounting to 80,000 paid on 18.04.2025 pertaining to March 2025. The trust follows the mercantile system of accounting.Amount of 4,72,000 (including GST of 72,000) paid to M/s. MNO and Co., an event management company, for advertising and organising a fundraising programme at Delhi. The full amount of 4,72,000 was remitted without deducting tax at source to M/s. MNO and Co. through RTGS on 1.3.2026. 5,00,000 paid to M/s Satyam, another charitable trust having same objects, by way of donation (other than corpus donation). 75,48,000 towards day-to-day operations of the trust.The trust given a sum of 8lacs as corpus to another trust registered u/s 12AB in F.Y. 2024-25. You are required to compute the total income of the Charitable trust for the A.Y. 2026-27.

Suggested Answer and Working Notes:

Computation of total income of charitable trust for the A.Y.2026-27 Particulars Particulars ₹ Income from properties held by trust 1,10,00,000 Add: Accrued interest on FDR 4,50,000 1,14,50,000 Less: 15% of income eligible for being set apart without any condition 17,17,500 97,32,500 Less: Amount applied for charitable purposes Electricity bill of 80,000 pertaining to March 2025 [Treated as application as payment is made in P.Y. 2025-26] 80,000 Payment to event management company [₹ 1,20,000 (i.e. @ 30% of 4,00,000 being the amount excluding GST of 72,000) is not considered as application on account of non-deduction of TDS. Accordingly,3,52,000 [₹ 4,72,000 -1,20,000] would be allowed as application. 3,52,000 Donation to another charitable trust having same objects (other than corpus) [85% of amount contributed would be treated as application] 4,25,000 Other application 75,48,000 Corpus donation to another charitable trust shall not be allowed as application of income. Nil 84,05,000 Total Income of the trust 13,27,500

Topics: Assessment of Trusts and Institutions, Political Parties and Other Special Entities

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