Setting up a trust in India provides multiple tax benefits, but it also comes with compliance responsibilities. Understanding these regulations helps trusts maintain their legal status and enjoy exemptions under the Income Tax Act.

Key Tax Benefits Available for Registered Trusts

1. Tax Exemption under Section 12A

• What is 12A Registration?
  • It allows a trust to claim complete tax exemption on its income.
• Eligibility:
  • The trust must be established for charitable or religious purposes.
  • At least 85% of income must be applied for the stated purpose.

2. Donations Exemption under Section 80G

• What is 80G Registration?
  • It allows donors to claim a 50% or 100% tax deduction on donations made to the trust.
• Eligibility:
  • The trust must be registered under 12A before applying for 80G.
  • Funds must be used strictly for charitable purposes.

3. GST Exemption for Trusts

• Trusts engaged in educational, medical, or charitable services are exempt from GST.
• However, if a trust provides services that qualify as commercial activities, it must register under GST and file returns accordingly.

4. Foreign Contributions (FCRA)

• To receive foreign donations, a trust must register under the Foreign Contribution (Regulation) Act (FCRA).
• Compliance: Annual returns must be filed with the Ministry of Home Affairs.

Compliance Requirements for Trusts

1. Annual Filing and Audit

• Registered trusts must file Income Tax Returns (ITR-7) if income exceeds the exemption limit.
• Trusts with total receipts above ₹2.5 lakh per year must maintain audited financial statements.

2. Renewal of 12A & 80G Registrations

• As per Finance Act 2020, 12A and 80G registrations must be renewed every 5 years.

3. GST Compliance (If Applicable)

• If a trust provides taxable services exceeding ₹20 lakh turnover, it must file GST returns.
• Due Dates: Monthly (GSTR-3B) and Quarterly (GSTR-1).

Penalties for Non-Compliance

• Failure to comply with tax regulations may result in cancellation of 12A/80G benefits.
• Delayed filing of tax returns attracts penalties of up to ₹10,000 under Section 234F.
• FCRA violations can lead to severe penalties, including a ban on foreign contributions.

Why Trust ASK ASSOCIATES for Tax & Compliance Assistance?

✅ Expert Assistance in 12A, 80G, GST, and FCRA Registration
✅ Hassle-Free Documentation & Filings
✅ Avoid Penalties & Ensure Compliance

📞 Contact ASK ASSOCIATES today and ensure 100% tax compliance for your trust!