Mumbai: The Bombay Chartered Accountants Society (BCAS) has said that celebrities and other individuals have raised donations from friends and relatives to help migrant workers, covid patients And their families should not be taxed on such funds.
These funds were received by him as a trustee for the benefit of others, the BCAS in its letter to the chairman of the Central Board of Direct Taxes has told (CBDT)
The BCAS has referred to the press note issued by the CBDT on June 25. In this note Income Tax (IT) exemption has been provided in respect of money received by the taxpayer from the employer or others for the treatment of COVID.
BCAS stated that funds are received by these individuals with a clear “overriding diversion of title to funds in favor of the beneficiaries”. Technically, money received by him is not taxable as he has received money in the capacity of trustees for the benefit of others.
Trustees are liable to tax in the same way and to the same extent as beneficiaries. Since beneficiaries are exempted under the press note, trustees will also get exemption, it states.
BCAS also suggests certain safeguards. Fund collectors (intermediaries and other individuals) must either spend the money directly covid Relief or donate it to IT-registered charitable trusts.
Any amount held by them for more than 6 months or for a period specified by the CBDT should not be entitled to tax relief. If they have received more than Rs 10 lakh, then submission of audited statement can be initiated along with their IT return, so that it can be scrutinized by the IT authorities.
These funds were received by him as a trustee for the benefit of others, the BCAS in its letter to the chairman of the Central Board of Direct Taxes has told (CBDT)
The BCAS has referred to the press note issued by the CBDT on June 25. In this note Income Tax (IT) exemption has been provided in respect of money received by the taxpayer from the employer or others for the treatment of COVID.
BCAS stated that funds are received by these individuals with a clear “overriding diversion of title to funds in favor of the beneficiaries”. Technically, money received by him is not taxable as he has received money in the capacity of trustees for the benefit of others.
Trustees are liable to tax in the same way and to the same extent as beneficiaries. Since beneficiaries are exempted under the press note, trustees will also get exemption, it states.
BCAS also suggests certain safeguards. Fund collectors (intermediaries and other individuals) must either spend the money directly covid Relief or donate it to IT-registered charitable trusts.
Any amount held by them for more than 6 months or for a period specified by the CBDT should not be entitled to tax relief. If they have received more than Rs 10 lakh, then submission of audited statement can be initiated along with their IT return, so that it can be scrutinized by the IT authorities.
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