Tax Column

I am an individual. I have donated four swing machines, chairs, tables and other furniture to a registered charitable trust to enable it to carry out vocational activities that support ladies. The total amount I spent is Rs 9 lakh. Can I claim benefit under Section 80G of the Income Tax Act? [EasyDNNnews:PaidContentStart] 

It is a good gesture on your part to give a donation worth Rs 9 lakh to a charitable trust for a good cause. However, unfortunately, you may not be entitled to benefit under Section 133 of the Finance Act, 2025 (Section 80G of the Income Tax Act, 1961). The Rs 9 lakh donation you have given is not in cash but in kind. The term ‘any sum paid’ refers strictly to monetary benefit. Hence, only cash donations qualify for deduction, and donations in kind are not allowable. You should have given Rs 9 lakh by way of cheque to the charitable trust, and with that money, the charitable trust could have bought machines and furniture. Anyway, in future, please follow the above suggestions. 

I am a secretary of a residential co operative society where I reside. The income of the co-operative society is interest on fixed deposits with Banks and receipts from members under various heads. Against this income, the society incurs expenses for maintenance and other administrative expenses and makes a surplus. Whether the surplus is subject to tax or enjoys exemption? 

Co-operative societies, although assessed to tax separately and also having a legal identity, act in a beneficiary capacity on behalf of their members. Therefore, societies enjoy the principle of mutuality. Any receipts by the co-operative society from its members, i.e., non-occupancy charges, transfer charges, common amenities charges, maintenance and other charges, are exempt from income tax on the principle of mutuality. The law is settled in view of various judicial pronouncements, including those of the Apex Court. As far as interest income is concerned, the principle of mutuality does not apply to it. Therefore, interest income is taxable in the hands of the society. However, if interest is earned from co-operative banks, then the same is entitled to deduction under Section 149 of the Finance Act, 2025 (Section 80P of the Income Tax Act, 1961). Interest earned on fixed deposits with nationalised banks is subject to tax at normal slab rates. 

I am an individual Non-Resident Indian and on deputation to Denmark. As an employee of an Indian company, I rendered services in Denmark and received salary from a Denmark company. However, the entire salary/remuneration was credited to my Indian bank account by the Denmark company. I am worried about where it will be taxed in India. 

If it is established that you are a Non Resident in a particular financial year, then foreign income earned outside India is not taxable in India. In your case, you have enough evidence that you have rendered services in Denmark by staying there, and on that salary income, you have also paid Denmark local taxes. As such, in my opinion, although the salary was received in India, the same is still in the nature of foreign income and earned outside India. Therefore, it cannot be taxed in India. The Assessing Officer may tax it, but you have a fair chance of succeeding at the appellate stage. Therefore, kindly ensure that, at the assesSMEnt stage, you submit all the relevant documents, including the Tax Residency Certificate of Denmark. 

My family has a registered charitable trust that owns a small plot of land in Pune. The trust proposes to sell this plot of land and is likely to make substantial capital gain. Can you please suggest what options are available with the trust so that the trust can enjoy exemption on the entire capital gain? 

A small plot of land is nothing but a capital asset, and therefore, on its sale, the surplus is nothing but long-term capital gain, which in normal cases is chargeable to tax. However, a charitable trust enjoys special exemption. Section 341(9) of the Finance Act, 2025 permits a charitable non-profitable trust to utilise the entire capital gain for acquiring another capital asset. Then, the surplus capital gain shall be deemed to have been applied for application to the objects of the trust. Interestingly, the new capital asset could be a fixed deposit with banks for a period of five years (CBDT Instructions No. 883 of 1975). As such, if your trust invests the entire capital gain in a fixed deposit, then the capital gain enjoys exemption, as it amounts to application of income for the purpose of the objects of the trust. Subsequently, if the trust wants to invest in another immovable property, then the fixed deposit can be encashed, and the entire amount realised can be utilised for the purchase of another immovable property. Therefore, the Act has given enough options for utilisation of the surplus amount on the sale of a capital asset. 

We would be happy to address your tax-related queries. Kindly share them with us at editorial@dsij.in

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