A STUDY OF CHARITABLE TRUSTS AND THE REASONS FOR

EXEMPTING IT UNDER INCOME TAX ACT

ABSTRACT
India follows the English concept of a trust as a vehicle under which
property is alienated from the original owners and held by a trustee for the benefit
of others. The law governing trusts is codified and contained in the Indian Trust
Act. A "trust" is an obligation annexed to the ownership of property and arising out
of a confidence reposed in and accepted by the owner, or declare and accepted by
him, for the benefit of another, or of another and the owner. Public trust are
generally formed for charitable or religious purposes, and are not intended to do
commercial activities. A public charitable trust is one, which benefits the public at
large, or some considerable portion of it. While, the income from private trusts is
available to specified beneficiaries and not to the public at large. A charitable trust
is defined to include relief of the poor, education, medical relief, and the
advancement of any other object of general public utility. Promotion of sports and
games is considered to be a charitable purpose. It is well established fact that any
legislature contrary to Indian constitution cannot survive. We the people of India
by virtue of the preamble of the constitution of India have decided to unite in
Secular, socialist, republic union of India. It may be argued that if we have
constituted secular India how a legislature can encourage the religious activity by
rendering exemption from tax laws. However as per constitution of India state is
indifferent from the religions and cant be religious bias. However India has
prosperous heritage of all the religions in the world viz. Hinduism, Islam, Jainism,
and Christianity etc. so, it is the duty of the state to preserve this heritage and
spread them as a matter of heritage. So, if the state tax the religious activities then
it will be tantamount to garbing down the rights of Indian Citizens. Hence, the

income tax act,1961 provides exemption to the income of Charitable and Religious
trusts. This paper aims to highlight upon the study on charitable trusts and its
reasons for exemption under the Income Tax Act,1961.
OBJECT OF RESEARCH:
This paper aims to elaborately discuss a conceptual framework for analyzing
the reasons for exempting tax upon charitable trusts. The conceptual framework
focuses on the distinction between religious trust and charitable trust under the
income tax act, registration procedures, classification of its income with reference
to the provisions of the act and the relevant provisions on exemption under the
Income Tax Act, 1961
HYPOTHESIS
Charitable trusts are the trusts which are formed with an objective of
providing relief to poor, education, medical relief, preservation of environment or
monuments, advancement of objects of general public utility etc. As the major
object of the trusts of this nature is to prove useful to the society or class of people
at large it may be exempted from taxation to some extent depending on the
relaxations provided by the taxation laws of the country.
SYNOPSIS
Introduction
CHAPTER - 1
Taxation of charitable Trust
CHAPTER - 2
Religious vis a vis charitable trust

CHAPTER - 3
Registration of Charitable trusts
Cancellation of Registration
CHAPTER - 4
Classification of Income of Charitable trusts
o Voluntary contributions
o Property held by Institutions
o Capital gains
CHAPTER - 5
Exemptions under Income Tax Act (S.80G)
Conclusion