• TDS on religious trusts

Does a religious trust with registration under sec 12 A / sec 12 AA of the Income Tax Act 1961( and income exempt u/s 11 of the same act) have to deduct TDS on payments made by it on rent, contracts and other applicable payments just like any other assessee? And subject to sec 197 A of the same Act, does it have to get TDS reduced from payments made to it for services etc?

I was told that the religious trust was advised that it was exempt from the provisions of TDS on payments made by it. So is there any provision in Income Tax or other laws or case laws that would permit it to be exempt from TDS provisions in Income Tax law?
Asked 7 years ago in Taxation

2 answers received in 30 minutes.

Lawyers are available now to answer your questions.

12 Answers

You are liable to deduct TDS @ 2% irrespective of the fact that payment is being made to a trust which is registered u/s 12 AA

2)deduction wont be required if trust gives you copy of certificate(no deduction of tax u/s 197) issued by their jurisdictional AO

Ajay Sethi
Advocate, Mumbai
96829 Answers
7812 Consultations

TAN i.e. Tax Deduction and Collection Account Number is required to be obtained by all persons who are responsible for deducting tax at source or collecting tax at source.

2)Quoting of TAN is mandatory in TDS and TCS returns, whether filed in paper or electronic format. The returns, whether in paper or electronic format, will not be received in case TAN is not quoted.

Ajay Sethi
Advocate, Mumbai
96829 Answers
7812 Consultations

You are liable to deduct TDS @ 2%, it is immaterial that the trust is registered u/s 12AA.

Also, note that the deduction is not required if the trust is providing you with the copy of certificate issued by the AO u/s 197.

You may go through the relevant section at the following link:

https://www.taxmann.com/budget-2015-16/file/samd126/earlier-section.aspx

Regards

Anilesh Tewari
Advocate, New Delhi
18090 Answers
377 Consultations

if it does have to deduct TDS, does the usual procedures have to be followed; i.e obtain a TAN, deduct and pay taxes and upload TDS returns on the required portals just as in the case of other assessees?

Yes obtaining TAN (Tax Deduction and Collection Account Number) is mandatory for a person/ body deducting TAX at source. Without mentioning the TAN it is not possible to deduct TDS.

Regards

Anilesh Tewari
Advocate, New Delhi
18090 Answers
377 Consultations

Yes, it all depends upon the Assessing Officers wide discretion power.

Kishan Dutt Kalaskar
Advocate, Bangalore
6179 Answers
490 Consultations

Please contact the Income Tax experts

Kishan Dutt Kalaskar
Advocate, Bangalore
6179 Answers
490 Consultations

If the certificate of no deduction has been obtained then no TDS is to be deducted.

Regards

Anilesh Tewari
Advocate, New Delhi
18090 Answers
377 Consultations

Religious trust does not have to deduct TDS as it has obtained certificate of no deduction

Ajay Sethi
Advocate, Mumbai
96829 Answers
7812 Consultations

Does a religious trust with registration under sec 12 A / sec 12 AA of the Income Tax Act 1961( and income exempt u/s 11 of the same act) have to deduct TDS on payments made by it on rent, contracts and other applicable payments just like any other assessee?

You are liable to deduct TDS @ 2% irrespective of the fact that payment is being made to a trust which is registered u/s 12 AA.

And subject to sec 197 A of the same Act, does it have to get TDS reduced from payments made to it for services etc?

No deduction of tax shall be made under any of the said sections in the case of an individual, who is resident

in India, if such individual furnishes to the person responsible for paying any income of the nature referred

to in or, as the case may be, section 194EE], a declaration in writing in

duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his

estimated total income of the previous year in which such income is to be included in computing his total

income will be nil.]

T Kalaiselvan
Advocate, Vellore
87030 Answers
2337 Consultations

I was told that the religious trust was advised that it was exempt from the provisions of TDS on payments made by it. So is there any provision in Income Tax or other laws or case laws that would permit it to be exempt from TDS provisions in Income Tax law?

Notwithstanding anything contained in this act, no deduction of tax shall be made from such

specified payment to such institution, association or body or class of institutions, associations or bodies as

may be notified by the Central Government in the Official Gazette, in this behalf.]

In section 197A of the Income-tax Act, for sub-section (1A), the following sub-section shall be substituted with effect from the 1st day of July, 1995, namely:—

"(1A) Notwithstanding anything contained in section 194A or section 194K, no deduction of tax shall be made under either of the said sections in the case of a person (not being a company or a firm), if such person furnishes to the person responsible for paying any income of the nature referred to in section 194A or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil'".

T Kalaiselvan
Advocate, Vellore
87030 Answers
2337 Consultations

if it does have to deduct TDS, does the usual procedures have to be followed; i.e obtain a TAN, deduct and pay taxes and upload TDS returns on the required portals just as in the case of other assessees?

Quoting of TAN is mandatory in TDS returns, whether filed in paper or electronic format;

The details of all such things which are required to be furnished in this regard as far as TDS is concerned has to be obtained mandatorily.

T Kalaiselvan
Advocate, Vellore
87030 Answers
2337 Consultations

Suppose the religious trust has obtained a certificate of no deduction u/s 197,

& it makes a contract payment (to a contractor) of 2,50,000/- for the year. Does the religious trust have to deduct TDS before making the payment to the contractor?

If certificate of no deduction has been submitted by the contractor, then no TDS can be deducted.

T Kalaiselvan
Advocate, Vellore
87030 Answers
2337 Consultations

Ask a Lawyer

Get legal answers from lawyers in 1 hour. It's quick, easy, and anonymous!
  Ask a lawyer