NGOs

Applicable Regulations:

  • Charitable Trusts registered under section 12AA of Income Tax Act, 1961 (‘the Act’) enjoy exemption from income tax subject to fulfilment of conditions stipulated in section 11 and section 13 of the Act
  • Section 11 and 13 place certain restrictions on activities and affairs of charitable trusts. One such restriction is modes of investments that can be made by trusts, out of their surplus incomes
  • Section 11 of the Act requires Trust to apply minimum of 85% of its income towards furtherance of its charitable objects
  • If the trust, however, fails to do so and wishes to accumulate any income (out of such 85%) for spending in future years, it can still avail exemption in respect of such unspent income by applying to their concerned Assessing Officer in the manner prescribedinsection11(2) of the Act
  • As regards accumulation of the balance 15% is concerned, there are no specific conditions or timeline prescribed.

Permissible Investments:

  • Section 11(5) of Income Tax Act, 1961 specifically lists down, all instruments in which charitable trust can invest. Further, Rule17Cprescribes forms and modes of investments or deposits referred to in clause (xii)ofsection11(5)
  • The Act has not prescribed a negative list of investments for a charitable trust. Thus, anything not specifically mentioned under provisions of Section 11(5), is prohibited mode of investment for a charitable trust and same needs to be evaluated on case to case basis

Furthermore, please note that a Charitable Trust may also need to comply with conditions (if any) specified under the tax exemption certificate obtained from relevant Charity Commissioner of the State in which it is registered and any investment restrictions specified thereof.

Universe of Investments

Indicative Rate of Returns