Donation to Trust by a Trust

[Anand Barpute]

Dear Friends Can a Charitable trust donate its assets and liabilities to other trust with similar objects or Can a trust merge with other trust with similar object If yes what are the Income tax implications of Donations and merger Which is convenient

CA Barpute

cell no 09822426111

AI Summary

Charitable Trusts Can Donate Assets to Similar Trusts with Income Tax Department's Approval under Sections 12A or 12AA. A charitable trust can donate its assets and liabilities to another trust with similar objectives, but this requires prior permission from the Income Tax Department if the trust is registered under sections 12A or 12AA. Donations are considered a proper application of income, allowing the donor trust to maintain its tax exemption. However, accumulated income exceeding 15% requires approval from the Assessing Officer. Merging trusts is less clear under the Income Tax Act but may be feasible with the Charity Commission's order. Donations are generally more convenient, and compliance with state laws is advised.