INDIA BUSINESS WORLD - MAY - JUNE 2007
The Month that was ...

INCOME TAX TIGHTENS TRUST NORMS

Charitable organisations will not be able claim incometax exemption retrospectively. These organisations can now avail tax exemption only from the year in which they register.

Earlier, a charitable organisation could get registered with the income tax department months after incorporation. It could then give explanation to the local income tax commissioner for the delay in registration and avail tax exemption retrospectively.

The government, through the Finance Act of 2007, took away the power of commissioners to provide for the delay in registration.

"The Finance Act, 2007 has removed the requirement of filing the application within one year of the creation or establishment of the trust or institution. It has also removed the power vested with the Commissioner for condonation of delay by stipulating that for any application made on or after the 1st day of June, 2007, registration will be granted from the financial year in which the application is made," an official statement said.

CBDT member AJ Majumdar said applications filed on or after June 1 will entitle the applicant to claim exemption of income from the financial year in which the application is made and not for earlier years.