INTRODUCTION
The taxation of charitable trusts has been the subject matter of discussions among professionals, in various fora. Tax issues of charitable and religious trusts, which evoked limited interest earlier, have attained significant importance. In the past two or three decades, charitable trusts which were treated with indulgence by the administrators, and lenience by the judicial fora, are looked upon with a certain degree of suspicion. A major reason for this is the use of charitable trusts as vehicles of tax planning. This has resulted in a number of legislative amendments, both procedural and substantive, culminating with the two recent decisions of the Supreme Court in October 2022.
Income of charitable trusts enjoys exemption on the basis of application thereof, subject to various conditions enshrined in the law. Some of these conditions, particularly the one as regards application, do not apply to contributions received by such institutions as “Corpus.” It is for this reason that this term has been the subject matter of legislative and judicial examination.
This article intends to examine the provisions of the Income Tax Act (hereinafter referred to as the Act), in regard to various issues governing the receipt of contributions to the corpus, their investment, utilisation and the tax impact of various actions concerning these aspects.
MEANING OF THE TERM CORPUS/RELEVANT PROVISIONS IN THE ACTRead More
