India

India has witnessed some developments on the trust front during last fiscal year. The Finance Act, 2007 has provided new provisions in relation to registration of charitable trust under the Income Tax Act, 1961 (ITA).This makes it easier for the tax payer to register charitable trusts and gives a right to appeal in case of rejection to register the trust by the Revenue Authorities. Further, the pass through status and consequential exemption to income of Venture Capital Fund set up to raise funds for investment in a Venture Capital Undertaking is restricted only if the Venture Capital Undertaking is engaged in certain specified businesses or industries. The major changes relating to taxation of trusts are summarized in the ensuing paragraphs: Exemption from Income of Charitable or Religious Trusts or Institutions linked to the time of filing the application for registration Under the erstwhile provisions in order to claim exemption from income tax a charitable or religious trust was required to make an application for registration to the Commissioner of Income Tax (CIT) within one year from the date of its creation or establishment. The provisions also provide that where such application was made after the aforesaid period, the CIT may condone such delay, if he is satisfied that the application was delayed for sufficient cause. It is now provided that the exemption from tax under ITA shall be allowed to charitable trust and other institutions from the financial year in which the application for registration is made.