Prepare an advice by Rajesh to Swayam, an institution on the tax consequence of receipt of 32 lakhs and application thereof by it based on the facts…

As the main object of the Swayam – an institution is "advancement of object of general public utility”, the institution will lose its “charitable” status for the P.Y.2023-24, since it has received 32 lakhs from an activity in the nature of trade, which exceeds 30lakhs, being 20% of the total receipts of the institution undertaking that activity for the previous year. The application of 85% of such receipt for its main object during the year would not help in retaining its "charitable" status for that year. The institution will lose its charitable status and consequently, the benefit of exemption of income for the P.Y.2023-24, irrespective of the fact that its approval is not withdrawn, or its registration is not cancelled.