Page 98 - DTPA Journal December 21

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Nov. - Dec., 2021

total income of any charitable or religious trust exceeds the maximum amount not chargeable to
tax, then the books of accounts of such trust shall require an audit by a chartered accountant and
audit report (Form 10B) is required to be filed before the due date specified for filing of such audit
report. Provisions of Section 12A(b) of the I.T. Act, 1961 are stated as under: -

“(b) where the total income of the trust or institution as computed under this Act without giving
effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not
chargeable to income-tax in any previous year, the accounts of the trust or institution for that year
have been audited by an accountant as defined in the Explanation below sub-section (2) of section
288 48 [before the specified date referred to in section 44AB and the person in receipt of the
income furnishes by that date] the report of such audit in the prescribed form49 duly signed and
verified by such accountant and setting forth such particulars as may be prescribed;”

The above citedsub-section state the conditions for audit applicability on a charitable or religious
trusts.
However, as far as basic exemption of Rs. 2,50,000/- is concerned, the same shall also be
available for the charitable or religious trust as Section 164(2)of the I.T. Act, 1961 clearly states
that the income of a charitable or religious trust, which is not exempt under section 11 or section
12, shall be taxed as if the such non exempt income is an income of an association of persons.
Provisions of Section 164(2)of the I.T. Act, 1961is stated under : -

“(2) In the case of relevant income which is derived from property held under trust wholly for
charitable or religious purposes, or which is of the nature referred to in sub-clause (iia) of clause
(24) of section 2, or which is of the nature referred to in sub-section (4A) of section 11, tax shall be
charged on so much of the relevant income as is not exempt under section 11 or section 12, as if the
relevant income not so exempt were the income of an association of persons”

Further, as per The First Schedule – Part 1 – Paragraph A, the Rate of Income Tax for Association
of Person is given as under: -

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