Section 11 – Income from property held for charitable or religious
1 Income from property held under trust wholly or partly for charitable or religious purp
2 Conditions for Exemption
AApplication of Income
At
• least 85% of the income derived during the year from property held under
The
• remaining 15% can be accumulated or set apart (not necessarily applied
BDeemed Application (Explanation 1)
If• the income could not be applied during the year due to non-receipt or other
The
• reason is recorded.
The
• income is applied in the immediate next year.
An
• application (Form 9A) is filed within the due date under Section 13
CAccumulation beyond 15% (Explanation 2 and Section 11(2))
If• the trust wants to accumulate income beyond 15%, it must:
Furnish
• a statement (Form 10) with:
The
• purpose of accumulation.
The
• period (not exceeding 5 years).
3 Types of Income Covered
Income
• from property held under trust.
Voluntary
• contributions (donations), except those made with a specific direction to fo
Business
• income, only if:
Business
• is incidental to the objectives of the trust.
Separate
• books of accounts are maintained (Section 11(4A)).
4 Situations Where Exemption is Denied (Violations)
Exemption
• is not available if:
Income
• is applied outside India (unless approved for promoting international w
Income
• or property is used for the benefit of specified persons (related partie
Business
• activity is not incidental to the trust's objectives or books not main
Funds
• are not invested as per Section 11(5).
Returns
• and statements (Form 10/10B/9A) are not filed on time.
5 Corpus Donations (Section 11(1)(d))
Corpus
• donations (donations with a specific direction to form part of the trust's corpus) a
They
• are invested in modes specified under Section 11(5).
Not
• applied for other purposes.
6 Business Income – Section 11(4) & 11(4A)
Section 11(4): If a business undertaking is held as property under trust, the Assessing O
Section 11(4A): Business income is exempt only if:
• The business is incidental to the trust's objectives.
• Separate books of accounts are maintained.
7 Inter-Charity Donations
Donations
• made from one charitable trust to another are considered application of inco
The
• recipient trust is also registered under Section 12A/12AB.
From
• AY 2024-25, only 85% of such donations are treated as application of inc
8 Investment of Funds (Section 11(5))
To claim exemption, funds must be invested in specified modes such as:
Savings
• accounts in scheduled banks
Government
• securities
Units
• of UTI
Fixed
• deposits with banks
Bonds
• issued by public sector companies
Other
• specified instruments
ritable or religious purposes
(NOTE:trust must be registered under Section 12A or 12AB to claim exe
itable or religious purposes is exempt from tax, provided the following conditions are met.
om property held under trust must be applied to charitable or religious purposes in India.
t (not necessarily applied during the year).
to non-receipt or other valid reasons, it will still be deemed applied if:
ue date under Section 139(1). Form 9A : Defer application of income to a futu
%, it must:
Form 10 Accumulate income for a specific pur
a specific direction to form part of corpus (those are covered under Section 11(1)(d)).
promoting international welfare in India’s interes
d persons (related parties) – this triggers Section 13.
ives or books not maintained.
d on time.
rt of the trust's corpus) are fully exempt, provided:
er trust, the Assessing Officer can determine its income.
red application of income only if:
12A/12AB.
ated as application of income (amendment made via Finance Act, 2023).
2A or 12AB to claim exemption under Section 11.
s are met.
s in India.
ation of income to a future year (Section 11(1)
income for a specific purpose for up to 5 years (Section 11(2)
Provision Summary
Section 11(1)(a)/(b) Exemption of income applied to charitable/rel
Section 11(1)(c) Income applied outside India (with prior appro
Section 11(1)(d) Exemption for corpus donations (if invested p
Section 11(2) Accumulation beyond 15% (up to 5 years with
Section 11(4) Income from business held under trust propert
Section 11(4A) Business income exempt only if incidental + b
come applied to charitable/religious purposes (85%
outside India (with prior approval)
orpus donations (if invested properly)
eyond 15% (up to 5 years with conditions)
siness held under trust property
e exempt only if incidental + books maintained