Now Charities and Trusts Must Keep Full Documentation to Claim Tax Exemption


All charities and trusts will now be required to maintain an extensive list of documents to obtain income tax exemptions. These include documents relating to payments made in the country or abroad, NAPs/Aadhaar of voluntary contributors, projects undertaken, loans contracted, investments made, etc.

A new rule (17AA) titled “Books of Accounts and Other Records to be Kept and Retained” has been added to the Income Tax Rules 1962. the tax advantages are intended for good causes. . New regulations came into force on August 10 and would also apply to universities, medical schools and hospitals.

Notification details

The notification states that these institutions will be required to maintain and maintain books of account, including a cashbook, ledger, journal, copies of invoices, original invoices (wherever issued in the person and receipts for payments made by the person) and any other records that may be necessary to keep to give an accurate picture of the state of the person’s affairs and explain the transactions made.

Charitable institutions or trusts responsible for the management of a religious place must keep a record of contributions received for the renovation or repair of a temple, mosque, gurdwara, church or another place notified under the Income Tax Act for the exemption. Similar details should also be kept for payments made.

All these institutions, as well as educational ones, will be required to keep records detailing the donor’s name, address, permanent account number and Aadhaar, in case of voluntary contribution. If the payments are made in India or overseas, details of who receives the payment and the reason for the payment should be kept.

In the case of educational institutions, details of the amount credited or paid to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution should be kept together with the reasons for such payments.

Regarding the loan and borrowing file, institutions will be required to keep details of the amount and date of the loan or borrowing, the amount and date of repayment, the name of the person from whom the loan was contracted, the address of the lender, the permanent account number and the Aadhaar number. of the lender.

Similarly, on the properties, details such as nature, address, cost of acquisition of the asset, registration documents of the asset, transfer of these properties, net consideration used for the acquisition of the new fixed asset must be retained. In the case of movable property, details of the nature and cost of acquisition will be required to be retained.

The notification clarifies that books of accounts and other documents may be kept in physical or electronic form. These must be kept and maintained by the fund or institution or trust or any university or other educational institution or any hospital or other medical institution at its registered office. “The books of account and other documents specified in paragraph (1) must be kept and kept for a period of ten years from the end of the relevant assessment year,” the notification states. However, if there is a reopening of the assessment, the books will be kept and kept until the assessment thus reopened has become final.

Published on

August 11, 2022


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