Requirements of society in order to exempt tax

What Should Be The Qualification Of Society In Order To Exempt Tax?

Answer (1)

Team Legistify

  • Sector-1, Noida

Under the national Income Tax Act (1961) and the Finance Act (2014) NGOs may qualify for tax-exempt status if the following conditions are satisfied:

- The organization must be a registered NGO according to Indian law;

- The organization must be formed for religious or charitable purposes;

- The organization must spend 85 percent of its income in any financial year on the objects of the organization;

- Income or property of the organization must not be applied for the benefit of the founder, trustee, relatives of the founder or trustee or a person who has contributed in excess of IRS 50,000 to the organization in a financial year;

- The organization’s income must be applied or accumulated in India. However, trust income may be applied outside India to promote international causes in which India has an interest, without being subject to income tax;

- The organization must timely file its annual income return;

- The organization must keep a basic record (name, address and telephone number) of all donors; and

- The funds of the organization must be deposited as specified in Section 11(5) of the Income Tax Act.

Answered on 28 Sep 2018


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