Some circumstances exclude section 11 of the income tax act

This provision of the Income Tax Act of 1961 outlines the situations in which a Trust would not be eligible for exemptions under Sections 11 and 12. The Income Tax Act's Section 11 addresses the exclusion of income from assets held in trust or from other contracts having a religious or philanthropic intent. Section 12 addresses the exemption of income received by such a trust from voluntary donations that were not made with the explicit intent that they become a part of the trust's or institution's corpus. This article lists the several types of income that a charity or religious trust or organisation would receive that wouldn't qualify for a tax exemption under this provision.

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Income not for public benefit

Any portion of the income from property held under a foundation for private religious purposes that does not pass for the benefit of the general public under this section will not be exempt from income tax. The public benefits and this is the reason for the exemption under Section 11. Therefore, tax exemptions are not applicable if the general public isn't benefited, regardless of the charitable activities of the trust's theme.

Income from a trust benefiting a specific caste or religion

The creation date is crucial since organisations founded before January 1, 1962, even if they serve to promote a specific caste or religion, would qualify for an exemption. Institutions or Trusts established after the specific date would be subject to the aforementioned rule and would not be excluded. However, a trust established for the benefit of women, children, Scheduled Castes, Backward Classes, Scheduled Tribes, or Scheduled Castes would not qualify as a religious trust. Therefore, Section 11 may be used and the exemption may be requested without any problems.

Any Income Trust that a Specific Person Benefits

Any trust or institution established after January 1, 1962 will not be eligible for tax exemption if any portion of the income benefits any of the people listed below as a result of the provisions of the trust or regulations governing the institution:-

  (a) The person who created the institution or the trust.

  (b) Any individual who, by the end of the pertinent prior year, has made a large donation of rupees 50,000.

  (c) If the author, founder, or other individual is a member of the Hindu Undivided Family.

  (d) Any management (by whatever name named) of the institution or trustee of the trust.

  (e) Anybody connected to the aforementioned author, founder, member, trustee, or management.

  (f) Any company in which any of the individuals listed in the aforementioned provisions has a significant stake.

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