Section

reference Provision Remarks

11(1) (a)Expense in India and 15% Exemption Not outside India
(b)Trust established before commence of act--Any expense allowed as
per object of the trust
(c)Trust for international welfare in that expense outside India allowed. Here outside India allowed
(d)Corpus not included in Income provided invested in 11(5)
Explanation In computing 15% Deemed Income of section 12 to be added (i.e. non
1(1) of 11(1) corpus)
Explanation Set apart for 1 yr-Form 9C-Form to be filled up to 2 months before
1(2) of 11(1) 139(1) 1 yr set apart-Form 9C
(a) If not received then can be used in India in yr of receipt plus 1 yr
(b) if received then can be used in India up to next yr
Explanation
2 of 11(1) Corpus donation to other trust not treated as application Corpus donation to other
Explanation For application - 40(a)(IA)-If no TDS then 30% disallowance,40A(3)/(3A)-
3 of 11(1) 10000 limits in cash/crossed/bearer cheque applicable
If corpus received for renovation or repairs of temple/mosque/etc. then
Explanation applies for that purpose only, maintain separate investment, don’t use
3A of 11(1) for donation to others Condition of religious corpus
Explanation in Expl. 3A if condition violated subsequently then Income of yr of
3B of 11(1) violation
Explanation First Exps from corpus then
4(i) of 11(1) Application from corpus is not treated as application trf from non-corpus to corpus
First proviso- But if later on amount trf from non-corpus to corpus and fund
invested in 11(5) then treated as application
Second proviso- This first proviso applicable if no violations
Third proviso- First proviso applicable only if such trf done within 5 yrs
from end of PY in which exps was done
Fourth proviso-First proviso applicable only if exps was done on or after
1.4.21
Explanation
4(ii) of 11(1) Any application from loan/borrowing not treated as application Expense from loan
First proviso- When loan repaid it will be treated as application up to
repayment
Second proviso- This first proviso applicable if no violations
Third proviso- First proviso applicable only if such repayment done
within 5 yrs from end of PY in which exps was done
Fourth proviso-First proviso applicable only if exps was done on or after
1.4.21
Explanation Any non-corpus donation to other trust then Application will be 85% of
4(iii) of 11(1) donation Non corpus donation to other
Explanation
5 of 11(1) Last yr surplus can’t be setoff this year
11(1A) (a) When cap asset trf and NC used in Pur of new Cap asset Capital gain of trust
 (On balance capital gain tax
(i)- Whole NC used then entire CG deemed applied as per 112/111A/112A
(ii)- Part of NC used then [CG or (Cost of new asset-cost of old asset)
whichever is lower] to be deemed applied
When fraction of cap asset was used for object of trust then exemption
11(1A) (b) will be proportionate
if set apart done as per "Explanation 1(2) of 11(1)" and not used then
Violation-Tax as per 115BBI
11(1B) deemed Income of the year in which such period expires
11(2) Set apart for application to be used in India provided- Set apart for 5 yrs-Form 10
(a) Max 5 yrs
(b) up to used invest in 11(5)
(c) Form 10 to be filled up to 2 months prior to 139(1)
First proviso- If court stay order came then 5 yrs to be extended up to
that stay
Explanation- If from set apart amount donation given then it will not be
treated as application
11(3) Deemed Income of the yr of violation if- Violations of set apart
(a) Set apart amount applied for other than charitable or religious
purpose (Tax as per 115BBI)
(b) Ceases to be invested in 11(5)
(c) Not utilised for purpose for which invested
(d) Paid as donation to other registered trust
If due to situation beyond control of trust, set apart amount can be
used for other object of trust (Other than mentioned in form 10) if AO
11(3A) permits
First proviso-AO will not allow donation to other trust from set apart
amount
Second proviso- However AO may allow donation to other registered
trust from set apart if trust is dissolved
IF trust has business Income and as per AO business income is more
than shown in accounts then such excess will not be exempted in
11(4) section 11 Business Income of trust
Section 11 can be applied to business of trust only if business is
11(4A) incidental to main object and separate books are maintained
11(5) Various modes where corpus and 11(2) will be invested
If capital expenses treated as application, then depreciation will not
11(6) allow again No depreciation
If trust registered in 12AB then section 10 will not apply except 10(1),
11(7) 10(23C), 10(46)
First proviso- If trust registered in 10(23C) or 10(46) then 12AB
registration will be inoperative
Explanation Any expense allowed as application in year of actual payment only (and
to section 11 not as per method of accounting)
Expense on payment basis
Proviso- If already expense allowed as accrual (Prior to this
amendment) then now on actual payment it will not be allowed again
Section 12- Income
Section reference Provision Remarks
Any voluntary contribution (Non corpus donation, Grants etc) to
12(1) be treated as Income of trust and section 11,13 will apply
If educational trust/Medical trust give services to specified person
of section 13 its allowed but Value of such services will be treated
12(2) as Income (From this 15% not allowed)

Section 12A-Condition of 11,12

Section reference Provision Remarks
12A(1)(a) Old provision
Section 11,12 benefit will apply only if trust has made registration
12A (1) (aa) application to PCIT/CIT U/s 12AA
If after registration, any modification in object of trust then within
12A (1) (ab) 30 days appli. to authority
12A (1) (ac) (i) Transitional registration from old 12AA to new 12AB
(ii) where final registration of 12AB is due to expire- Reapply at
least 6 months prior to expiry
(iii) Where trust is provisionally registered and now applying for
final then apply at least 6 months from start of activity or at least
6 months prior to expiry of provisional whichever is earlier
(iv) Where 12AB became inoperative due to registration in
10(23C)/10(46) and now in need to make operative then at least
6 months prior to year in which operative to be done
(v) Modification of object then within 30 days of such
modification
(vi)(a) Provisional Registration- within 1 yr prior to PY If activity not started
(b) Direct final registration provided earlier no exemption in
10(23C) or 11/12 claimed If activity started
If total Income of trust prior to section 11,12 exceed BEL then
BOA to be made and Audit to be done then only 11,12
12A(1)(b) exemptions allowed
Section 11,12 benefit allowed only return filled as per due date of
12A (1) (be) 139(4A)
12A (2) Benefit of 11,12 allowed from yr in which application is made

Section 12AA- Procedure of Registration-Not applicable on or after 1.4.21

Section 12AB- Procedure of Registration

Section reference Provision Remarks
12AB(1)(a) Transitional Application to be approved for 5 yrs

(A)/(B)For any other application (Other than provisional

12AB(1)(b) registration) CIT will check geniuses and correctness and then
 order for approval for 5 years/rejection-after OBI. If rejected then
provisional registration will also be cancelled

(C) Provisional application will be approved for 3 years

12AB (2) Old provision
12AB (3) Transitional order to be passed within 3 months
Provisional Approval order to be passed within 1 month
Other approval orders to be passed within 6 months from EOM in
which application done
12AB (4) Power to cancel registration subsequently

Section 13- Section 11 not to apply in certain cases

Section reference Provision Remarks
If Part of Income held for private religious purpose and not for
13(1)(a) public
So religious trust can use
If Charitable trust but Income is used for particular Income for particular
13(1)(b) caste/creed/community caste/creed etc.
If applied then tax u/s
Income/Asset of trust used for benefit of specified persons u/s 115BBI and also penalty
13(1)(c) 11(3) u/s 271AAE.
13(1)(d) Funds invested by trust in modes other than 11(5) Tax U/s 115BBI
Certain transactions which are deemed to have been applied for
13(2) specified persons and hence treated as violation of 13(1)(c)
13(3) List of persons who are treated as specified persons
If investment in concern of 13(3) does not exceed 5% of capital of
13(4) that concern then 11,12 benefits cannot be denied.
13(5) Old provision
If services given to specified persons by educational trust or Income to be taxed as per
13(6) medical trust then exemption not to be denied 12(2)
13(7) Anonymous donation not to be exempted u/s 11,12 Taxed U/s 115BBC
Section 11,12 not to be applied if violation of proviso to 2(15)-
Business Income exceed 20% in case of trust having object of
13(8) general public utility.
Benefit of set apart U/s 11(2) shall not apply if form 10 not filled
13(9) or ROI not filled upto due date of 139(1).
Where trust violate 13(8) or 12A(1) and due to that section 11,12
not available then also revenue expense done in India can be
deducted provided:
a. Exps not from corpus
b. Exps not from loan
c. Its not depreciation of asset of which capital exps claimed
earlier
13(10) d. Exps as donation to other person.
 Explanation: 40(ia), 40A(3)/(3A) will apply
If trust covered in 13(10) then no other exps/loss allowed except
13(11) 13(10)
Explanation 1 Relative definitions
Trust working for schedule caste, backward caste, schedule tribe,
Explanation 2 women, children is not for particular caste etc.