Income from assets kept for religious or charitable reasons

You should know about the benefits of 80g of income tax.

The following revenue shall not be added to the total taxable income of the individual receiving the income for the preceding year, subject to the restrictions of sections 60 to 63:-

 (a) revenue from assets held in trust that are used exclusively for charitable or religious purposes, to the extent that such revenue is applied to such purposes in India; and, where any such revenue is accumulated or set aside for application to such purposes in India, to the extent that the income so accumulated or set aside is not in excess of fifteen percent of the revenue from such property;

  (b) income from property held in trust that is used only in part for these purposes and that was established before the passage of this Act, to the extent that such income is applied to these purposes in India; and, to the extent that any such income is ultimately set aside for application to these purposes in India, to the extent that such set-aside income does not exceed 15% of the income from such property;

  (c) revenue received from property held under trust:-

       (i) founded on or after April 1, 1952, for a philanthropic purpose that contributes to advance global welfare in which India is concerned, inasmuch as such revenue is used for such purposes outside of India, and

       (ii) for religious or philanthropic purposes, established before April 1, 1952, inasmuch as such money is used for such purposes outside of India;

   (d) revenue from voluntary contributions made with the intent that they become a part of the trust's or institution's corpus.

Know more about tax exemption under section 80g.

Any such voluntary donations as are mentioned in section 12 must be treated to be part of the income for calculating the 15% of the revenue which may be accumulated or set apart.

If, for any reason, the entire or any portion of the income was not received during the previous year, or for any other reason, the income applied to charitable or religious purposes in India falls below 85% of the revenues earned during that year from assets owned under trust, or, as the case may be, held under trust in part, by any amount, then,

 (a) in the scenario, the amount of income used for these purposes in India during the year before it was received or the year after it was received that did not exceed the specified amount, and

 (b) in the scenario, the amount of money used for these purposes in India during the year immediately preceding the year from which the income was obtained must not be greater than the specified sum,

may be considered income if it was used for these reasons in the prior year it was earned.

Know more to clarify the concept of 12a registration.