CBDT Provides Clarity: 85% of Trust Donations for Charitable or Religious Causes as per Finance Act, 2023
The Central Board of Direct Taxes (CBDT) has issued a clarification regarding the regulations governing donations made by one trust or institution to another for the allocation of income. In official statement, the CBDT stated that income from funds, institutions, trusts, educational establishments, hospitals, or other medical facilities specified in Section 10(23C) of the Income-tax Act, 1961, or any trust or institution registered under Section 12AA/12AB of the Act, is exempt from tax, provided certain conditions outlined in various sections of the Act are met.
As per the provisions of the Finance Act 2023, donations made by a trust or institution are deemed to be utilized for charitable or religious purposes only up to 85% of the donated amount. This clarification was issued in response to inquiries regarding the treatment of the remaining 15% of the donation to another trust or institution.
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