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Taxation Central Ministry of Finance Income Tax Act, 1961

CBDT issues circular clarifying exemption for inter-Trust donations

06-Mar-2024 | Circular No. 3/2024

CBDT has issued a circular clarifying exemption for inter-trust donations, effective from 6th March, 2024.

By virtue of the Circular, it is reiterated that eligible donations made by a trust/institution to another trust/institution under any of the two regimes referred to in para 2 shall be treated as application for charitable or religious purposes only to the extent of 85% of such donations. It means that when a trust/institution in either regime donates Rs. 100 to another trust/institution in either regime, it will be considered to have applied 85 percent (Rs. 85) for the purpose of charitable or religious activity.

Further, it is clarified that 15 percent (Rs. 15) of such donations by the donor trust/institution shall not be required to be invested in specified modes under section 11(5) of the Act as the entire amount of Rs. 100 has been donated to the other trust/institution and is accordingly eligible for exemption under the first or second regime.

For detailed information, please refer to the attached document.

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