Section 2(15) of incometax act Charitable institution

[GOPAL HARLALKA]

Rajsthan Bhawan is a 'DHARMSHALA' It is registered u/s 12A of the Income Tax Act. Till assessment year 2015-16 there is no tax liability on surplus of income over expenditure because gross receipt does not exceed ₹ 2500000/- There is change in section 2(15) by Finance Act 2015. Under the new law receipts should not exceed 20% of the receipts..Source of income of Dharmshala is rent from letting out the Bhawan and interest on fixed depost with bank.

my query is - under the amended law will there be tax liability on dharmshala?

[satbir singhwahi]

AS PER THE AMENDMENT THERE WILL BE PROBLEM FOR SMALL INSTITUTIONS

AI Summary

Charitable status compliance: amended definition may create tax exposure for small dharmshalas deriving rent and interest income. Whether a dharmshala registered as a charitable institution will incur tax liability due to the Finance Act, 2015 amendment altering the definition of charitable purpose by imposing a requirement that specified receipts not exceed twenty percent of total receipts; the dharmshala's income is rent and bank interest and previously had no tax while gross receipts stayed below the earlier threshold, but the new proportional receipts condition may create tax exposure for small institutions.