Subject to certain conditions, the income of a charitable and religious trust is tax-free. Trusts are granted exemptions under various provisions, including Sections 10, 11, and so on. The following are some of the exemptions available to a trust:
1) Section 11 exempts income derived from property held in trust solely for charitable or religious purposes, to the extent that such income is used for charitable or religious purposes in India. This exemption, however, is subject to certain conditions.
2) In accordance with Section 12, income received in the form of voluntary contributions by a trust established solely for charitable or religious purposes, or by an institution established solely for such purposes, is also exempt from taxation (subject to certain conditions).
3) Any voluntary contributions received by an electoral trust are not included in the total income of the trust (subject to certain conditions).
4) An educational institute’s income is exempt under Sections 10(23C)(iiiab)/(iiiad) (vi).
5) The income of a hospital or other institution is exempt if it meets the conditions outlined in Sections 10(23C)(iiiab)/(iiiad) (vi).