Hey....Our trust got recently registered under section 12AA with the CIT(Exemptions). Now I n…
Hey....Our trust got recently registered under section 12AA with the CIT(Exemptions). Now I need to know how much amount shall we spend on purposes of the trust so as to avail exemption?
Hello, before I answer you, I have to tell you one important thing.
"The trust can't spend on anything not mentioned in its objects clause."
Now answering you:
1. If you spend 85% of trusts' total receipts, then 100% of trusts income is exempt.
2. In case, trust spend less than 85%; then the trust has two options:
- Option # 1 - Trust can resolve to spend the money in the next five years for a particular purpose.
- Option # 2 - Trust can inform the assessment officer that it would spend the money in next year.
3. If the trust doesn't do any of the two above then, it would have to pay tax on the shortfall of expenditure, i.e., 85% of receipts - expenses made.
