Query- Tax treatment of Capital Gain on sales of Assets in charitable Trusts/NGO

Dear SRRF Dialogue members,

We have received a new query under Income Tax,  from Mr. KPS Varadhan, HiH

”Please explain the profit on sale of Asset in NGO’s ?”

Best regards,
Tanvi Dogra
SRRF Dialogue, Coordinator

Socio Research & Reform Foundation
(A Non Government Organisation)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
Tele/Fax: +91-11-25821088, 25817157, 25722044
e-mail: socio-research@sma.net.in


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One Response to Query- Tax treatment of Capital Gain on sales of Assets in charitable Trusts/NGO

  1. Deepak Bansal says:

    IT Act1961 – Sec 11(1A) provides for taxation of a capital asset being property of a trust/ institution arising from a sale of such capital asset.

    The provisions states that the capital gains arising should be invested in another capital asset. Pl. note that the definition of capital asset shall be as per the definition available in Sec 2(14) of IT Act1961. The treatment shall be same whether capital asset is acquired from FCRA funds or domestic funds.

    Regarding FCRA implications, there are two thoughts, one thought says that the funds released from sale of FCRA assets should be deposited back into FCRA bank a/c and other thought is that as FCRA funds have already been reported spent in the year of application/ acquisition (FC-3 has 56 objects wherein all FCRA spending need to be reported), any sale of such assets give rise to non-FCRA money.

    Although it is observed that most persons deposit proceeds received on sale of assets acquired from FCRA funds back in the FCRA Account, and therefore this would be a safer practice to follow.

    Deepak Bansal

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