“Application” for Charitable Trust.

[Ethirajan Parthasarathy]

With effect from A.Y 2024 -25 only 85% of donation given by a 12AA approved charitable organization to similar organization will be considered as “application” of income.

I have a 12AA approved Trust who undertake civil repairs at another approved trust and sometimes even provide food and educational materials to their inmates.

Will these kind of outflow be treated as donation and only 85% of such expenditure will be considered as application of money or we can take 100% as application.

AI Summary

Application of charitable funds: transfers between similar organisations face restricted tax recognition, affecting treatment of inter-charitable expenditures. Transfers by a 12AA-approved charitable organisation to another similar approved body are limited for tax recognition: only eighty-five percent of such transfers will be treated as application of income. The central question is whether payments for operational support-civil repairs, food, or educational materials provided at another approved trust-are to be treated as donations subject to the eighty-five percent recognition limit or as direct applications of income eligible for full recognition by the transferring trust.