Indore (Madhya Pradesh): Senior CA SN Goyal has said that any organisation registered under Section 8 of the Trust, Society or Company Act for carrying out public welfare work becomes eligible for exemption and deduction for registration under Section 80G and 12AA of Income Tax. Generally speaking, the word NGO is used, which is referred for all three- Trust, Society and Company. The process of registration should be done within three months of forming the trust so that it can get legal form.
Goyal said this while addressing a seminar organised by CA Indore branch of ICAI on the subject of Trust and its various aspects. Goyal said that if a trust has to be formed then registration can be done by paying a maximum stamp duty of Rs 500. If a trustee donates his own property to the trust, then there is no need for stamp duty. While forming the trust, it should be kept in mind that if the trust needs to take a loan, then it should be included in its bylaws, otherwise it will face problems later. If there is any kind of change in the trust, then the same has to be informed to the public registrar within 90 days.
Under Section 13 of the Trust Act, if the trust has to invest anywhere other than the scheduled bank and post office, then its approval has to be obtained from the public trust. He also said that one can transfer one's property to the Trust only with permission after paying the prescribed fee at the time of purchase and sale, non-compliance of which may result in penalty and other action.
CA Bhagwan Agarwal said that before donating to any other institution, it is mandatory for the donor trust to see the objective of the trust. A trust can donate only to another trust with the same objective. According to the new income tax provisions, only 85% of the donation given by one trust to another will be available as deduction.
A lot of details have to be taken care of while filling the trust return. Since the department is computerised, even small mistakes can prove costly. 85% of the funds of a trust should be utilized to fulfil its objectives, otherwise the income tax exemption available to them may be lost. Also, at present the Income Tax Department is matching the information filled in the audit report and the return and giving notice, action is being taken if the correct documents are not submitted. Also, the trusts which are not maintaining all the documents and proper compliance will have to pay 30% of the market value of the trust property as tax.
