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of <h1>New Tax-Exemption Rules: 85% Income Application for Charitable Purposes Required, 15% Donation Flexibility Under Income-tax Act, 1961.</h1> The circular issued by the Central Board of Direct Taxes outlines conditions under which income from certain funds, trusts, institutions, universities, and medical institutions can be tax-exempt under the Income-tax Act, 1961. It specifies that at least 85% of the income must be applied to charitable or religious purposes, either directly or through donations to similar trusts. The Finance Act, 2023 amendments clarify that only 85% of donations are treated as applications for these purposes. The remaining 15% of donations need not be invested in specified modes, as the entire donation is eligible for exemption. An example illustrates the application of these rules.
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