Whether FBT is applicable to Charitable Trusts? Kishan Lal Agarwal
Proviso to section 115W(a) of the I T Act inserted from Asst Yr 2006-07 specifically exempts funds ,trusts or institution eligible for exemption u/s 10(23C) or registered u/s 12AA of the I T Act . The proviso states
Provided that any person eligible for exemption under clause (23C) of section 10 or registered under section 12AA or a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951) shall not be deemed to be an employer for the purposes of this Chapter;
Earlier ,CBDT vide circular no 8/ 2005 clarified under question number 4 as follows :
Whether FBT is leviable on a company (registered under section 25 of Companies Act) even if it is registered u/s 12AA or its income is exempt
u/s 10(23C)?
4. FBT is not payable by a trust, fund or institution if its income is exempt under section 10(23C) or it is registered under section 12AA of the Income-tax Act. Therefore, a company registered under section 25 of the Companies Act will also not be liable to FBT if its income is exempt under section 10(23C) or such company is registered under section 12AA of the Income-tax Act.
Therefore if the trust is not getting any kind of exemption u/s 20(23C) or 12AA , it shall be under FBT.
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