what is Section 13 of the Income Tax Act?
1961 specifies the circumstances where exemptions under Section 11 and 12 would not be available for a Trust. Section 11 of the Income Tax Act deals with the exemption of income derived from property held in trust or other legal obligations, relating to religious or charitable purposes. This article highlights the various incomes of a charitable/religious trust/institution which would not be eligible for tax exemption under Section 13.
Income from Trust for the benefit of a particular Religion or Caste:
The date here is very important as institutions created before 1st April 1962, even if the purpose of the same is to propagate a particular caste or religion, would be eligible for exemption. on the other side if the a trust created for the welfare of Scheduled Castes, backward classes, Scheduled Tribes or women and children wouldn’t make it a religious trust. The exemption under Section 11 is available to public religious trusts only and not to trust for private religious purposes.
Income not for the Benefit of Public – Section 13(1)(a):
Income tax exemption will not be available for any part of the Income from the Property held under a trust for private religious purposes which does not ensure for the benefit of the public under Section 13(1)(a). The basis of exemption under section 11 is that the public is benefited. Hence, whatever may be the theme of Charitable activity of the trust, if the public isn’t benefited, tax exemptions shall not be applicable.
Any Income Trust which Benefits Certain Person:
Tax exemption will not be available for any type of Trust or Institution created after 1st April 1962. under the terms of the trust or rules governing the Institution, any part of the Income enures to the benefit of any person mentioned below:
- Any person who has made a significant contribution amounting to rupees 50,000 by the end of the relevant previous year. Where such author, founder or person is a member of the Hindu Undivided Family.
- The author of the trust or the founder of the institution.
- Where such author, founder or person is a member of the Hindu Undivided Family.
- Any person related to such author, founder, person, member, trustee or manager as aforesaid.
- Any concern in which any of the person mentioned in the above clauses has a substantial interest.
- Any trustee of the trust or manager (by whatever name called) of the institution.
section 13A of income tax act
Section 13 A of the Income Tax Act deals with the exempt Income of the Political Parties in India. … Political Pary for the purpose Section 13A of the Income Tax Act means a political party registered under Section 29A of the Representation of the People’s Act 1951 (43 of 1951).
The following incomes derived by a political party are not included in computing its total income:
- Income chargeable under the head Income from House Property.
- Income by way of capital gains .
- Income chargeable under the head Income from other sources.
- Income by way of voluntary contribution from any person.
The exemption of the above income shall be available only on satisfaction of following conditions:
- The political party backs and maintains such books of Accounts and other documents as will enable the Assessing officer to properly deduce its income
- The accounts of the political party are audited by a Chartered Accountant where the voluntary contributions from a person exceeds Rs 20,000, it books and maintains a record of such contribution and the name and address of the person who has made such contribution.
- The treasurer of such political party or any person authorised by the political party in this behalf must submit a report under Section 29(3) of the Representation of People’s Act 1951 for the relevant financial year.
section 13b of income tax act
Section 13B: Closely connect with Section 13A is exemption from Income Tax accorded to income of an electoral trust under Section 13B of the Income Tax Act. An “electoral trust” means a trust so approved by the Central Board of Direct Tax in accordance with the scheme made in this regard by the Central Government.
An “electoral trust” means a trust so approved by the Central Board of Direct Tax in accordance with the scheme made in this regard by the Central Government.
Any voluntary contribution received by an electoral trust shall be treated as income of the Electoral Trust and treated as exempt if the following conditions are satisfied.
- The Electoral Trust distributes to any political party registered under Section 29A of the RPA, 1951 during previous year 95% of the aggregate donations received by it during the said previous year along with surplus, if any, brought forward from any earlier previous year,
- Such Electoral Trust functions in accordance with rules made in this regard by the Central Government
Political parties are indirectly financed by the government by:
- Not charging income tax in respect of income of political parties (Section 13A)
- Not charging income tax in respect of donations/ income of electoral trust distributing its income/ contribution / surplus to political parties (Section 13B)
- Not charging income tax in respect of any sum contributed by Indian Company to any political party (Section 80GGB)