Any sort of direct tax charged by the central government on the income of a person or a business which is earned during one financial year is called Income tax. Income tax is calculated with the help of various tax slabs that have been defined by the Income Tax Department. In order to regulate the rules and regulations regarding Income Tax, an act was enforced by the government of India. This act is known as the Income Tax Act. This act was enacted by the government in 1961 and contains various sections listed inside of it.
In this blog, we will try to understand one of the important sections of the Income Tax Act. We will discuss Section 11 of the Income Tax Act that deals with the taxes related to charitable trusts or religious trusts.
Under Section 11 of Income tax act, all the income that is received from a religious or charitable trust is fully tax-exempt. But section 11 of income tax levies a condition of these trusts, i.e. the trust must have separate bank accounts that are maintained by the trust and are related to the business and all the activities that are being performed by the trust are working towards realising the goal set by the respective trust. Let us dive into some inner details of section 11 of income tax act.
In order to be able to make use of the exemptions listed under the section 11 of the income tax act, the requirements that are listed below must be met. These are:
Exemptions provided to Hospitals
If a hospital is being run by a person for some humanitarian cause, then in this case, the income tax will be exempted. aThis exemption under section 11 of income tax act also applies to any foundation that operates a hospital for the same cause.
If any organisation or establishment managed by a person provides financial assistance to some school or college or some other educational institution, then it is exempt from taxes due to the section 11 of income tax act.
Any society that runs a school or college all by itself is usually granted an exemption because of section 11 of the income tax act.
There are a few taxable clauses of section 11 of income tax act which are subject to various provisions of the Sections 60-63. These are listed below:
The exemptions that are mentioned under section 11 of income tax act are also subjected to the satisfaction of a variety of conditions that are set out in the Sections 12. 12A, 12AA, 13 and 60-63.
What are some of the judicial decisions related to Section 11 of Income Tax Act?
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