Rationalisation Of Charitable Trusts Provisions: Budget 2024-25

The Finance-Minister under the Union Budget 2024-25 proposes to merge two tax exemption regimes for charitable trusts into one, by stating that the first regime for trusts, funds, or institutions to be merged and transited to the second regime in a gradual manner. The two main exemption regimes for trusts or funds or institutions are contained in Section 10 (23C) and under sections 11 to 13 of the Income tax Act that provide procedure for filing approval applications / registrations, conditions for approval or withdrawal - both the regimes aim to provide similar benefits. The finance minister therefore proposes that: 1. Applications under clause (23C) of section 10 filed on or after Oct 01, 2024, not to be considered; 2. Applications filed before Oct 01, 2024, and pending would be processed and eligible under the first regime itself; 3. Existing approved trusts, funds or institutions would continue to get the benefit of exemption under section 10 (23C), till the validity of the said approval, and would be eligible to apply for registration subsequently, under the second regime. The amendments have accordingly been proposed in section 12A and they will take effect from Oct 01, 2024. Further, where a trust or institution which is approved / registered under the first or second regime, as the case may be merges with another approved / registered entity under either regime, it may attract the provisions of tax related to accreted income of certain trusts and institutions. The finance minister therefore proposes that the said merger shall not attract provisions of tax on accreted income of certain trusts and institutions, in order to provide greater clarity and certainty to taxpayers; For this, a new section 12AC is proposed to be inserted and these amendments will take effect from the Apr 01, 2025.

Rationalisation Of Charitable Trusts Provisions: Budget 2024-25

Pankaj Bajpai

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