ITR Filing For Society and Trust

Introduction

All charitable trusts, societies, and foundations fall under the category of an NGO, or non-profit organization, which promotes the economic and social well-being of society. Different types of organizations might be established to lend a helping hand in charity endeavors. A "charitable purpose" is anything that helps the poor, whether it is through education, medical assistance, or the development of a general good. NGOs can benefit from Section 80G, among other things.

A trust is a type of legal entity established to support and encourage the expansion of religious or charitable organizations. Trusts that are public and private are the two groups into which these organizations fall. Because they often refrain from engaging in commercial activities, they are granted several tax breaks under the Income-Tax Act. This time, let's look at the benefits that Trusts could be able to receive as well as how they must file their IT returns. Charitable and religious trusts that don't do business are given several benefits under Section 11 of the Income Tax Act. In the meantime, a "charitable" trust offers assistance and aid to the poor or needy through education, medical assistance, food, or even clothing, by Section 2(15) of the Income Tax Act. 

Advantages Of ITR Filing For Society and Trust

To be granted government funding

The key benefit of submitting a charitable income tax return is the simplicity with which they can obtain government funding relevant to their work. Only if your trust satisfies the requirements of the ministry, organization, or department may you apply for government grants. The income tax return, the profile of the NGO, the annual reports, and the audit reports provide the basis for the money granted by the relevant ministry or department. So, filing an ITR is essential to getting a government award.

Simple handling of loans

Income Filling up tax returns assists charity trusts in obtaining loans from different banks. When a firm qualifies for a high-value loan, such as a long-term loan or a loan for working capital, the majority of banks and NBFCs want ITR receipts from the business for the most recent three years. ITR is regarded by lenders as the most reliable document demonstrating a company's revenue and turnover. As a result, if you plan to borrow money in the future, you should file your income taxes regularly.

Explain net worth

The ITR submitted to the government establishes a company's financial worth. Return filing aids in keeping track of an entity's net worth by displaying a business's turnover, assets, and revenue. The ITR record also reveals a person's ability to pay and expands their capital base.

ITR form

ITR-7: ITR-7 is for individuals, including businesses, who are required to submit returns in accordance with Sections 139(4A), 139(4B), 139(4C), 139(4D), 139(4E), or 139(4F).
Return by charity trust (section 139(4A)): Every person receiving income generated from assets kept on trust or other legal responsibility completely or exclusively for charitable or religious purposes is required to file a return under section 139(4A).

Return by agency (section 139(4C)): Every agency must file a return in accordance with section 139(4C).

Association for scientific research; news organization

3. The organization or establishment mentioned in section 10(23A)

4. Organisation mentioned in section 10(23B)

5. A hospital or other medical facility, a fund, a university, or another type of educational institution.

Return by business trust (section 139(4E)): Any company trust that does not have to provide an account for earnings or loss under any other provisions under this section must submit a return under section 139(4E).

Return by political party (section 139(4B)): If the total income before applying the rules of section 139A is above the maximum amount exempt from income tax, a political party is required to file a return under section 139(4B).

Report by universities and colleges (section 139(4D)): Every university, college, or other educational institution that does not have to provide a report of revenue or loss under any other requirement under this chapter shall file a return under section 139(4D).

Any investment fund mentioned in section 115UB is required to submit a return in accordance with section 139(4F). Under any other requirements of this section, it is not necessary to provide a return of income or loss.

Documents Required for ITR Filing For Society and Trust

• Pan card for the nonprofit organization

• Information on each board member and director of the charitable organization Payment and Receipt Statement

• Previously filed statements, if any

Procedure for ITR Filing For Society and Trust

• The Revenue Tax Act has outlined a few requirements that must be met in order to exempt a charitable trust's revenue from income taxation. These are the conditions:

• The trust must be registered with the Department of Income Tax as a charitable trust in order to qualify for the Act's exemption. The registration must follow the procedures outlined in Section 12AA of the Act.

• A trust deed or other comparable legal document must bind the trust's property.

• No one who is directly or indirectly affiliated with a charitable organization shall receive any of the trust's income.

• The trust is required to provide the books of accounts for audit if the charity institution's earnings surpass the basic exemption limit.

• The trust shouldn't have been established to support or advance a specific caste or religious community.

• It should be for philanthropic or religious purposes that the property is held.

• Only the part of revenue used for charitable or religious causes will be free from taxation.

• If 85% of the revenue is used to further the goals of the trust during the year, income from property held in trust or owned by an institution solely for charitable or religious purposes is exempt from taxation. When spending is less than 85% of income.

Conclusion

If a company doesn't provide its return of income by the deadline, it can still do so any time before December 31st of the applicable assessment year or when the assessment is finished, whichever comes first. All trusts are required to electronically file their income tax returns. If the Trust is obliged to have its accounts audited, the income tax return and the Digital Signature of the Chartered Accountant in charge of conducting the audit must be sent electronically.

eStartIndia is one of the leading cloud-based platforms that help you to file your ITR (Income tax return) without any hassle at an affordable cost.

Author:

Archita Sharma
Kanpur
IV year BA.LLB (Hons.) student from PSIT College of Law