When freshers are appointed as Treasurers, they are often at a loss because they have no knowledge of the Income Tax rules applicable, no knowledge of accounts, no idea as to what is to be done and how to go about the procedures. This article is to help such people in the area of the income tax rules applicable to us.
The first thing that we have to understand is that unlike other individuals and legal entities who have to pay Income Tax on their income if it is beyond the basic exempt limit of Rs 2,50,000, the registered society we belong to is registered for Income Tax exemption under section 12AB of the Income Tax Act, because we are charitable in nature. It means that income of the charitable societies is exempt because of the charitable works they are involved in. This is the basic difference between the business groups that exist for the purpose of making money and charitable societies which exist purely with a service motive for the needy public.
But the tax exemption that we enjoy is not a blanket exemption. Our exemption is based on certain terms and conditions. As long as the activities of our societies remain charitable and we comply with the terms and conditions given in the Income Tax Act, we will enjoy the tax exemption. Some such basic conditions can be listed as below:
Fr Alex G., SJ
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