Receiving charitable donations? What you should think about

Introduction

Charitable organisations, irrespective of the scale of their activities, seek and accept donations in various forms. Predictably, payment and receipt of donations, susceptible as they may be to misuse, are subject to regulation in India, and there are multiple legal complexities that need to be navigated through in connection with these.

In this article, we identify some questions that donee organisations must consider when accepting charitable donations in order to suitably address various legal issues and formalities applicable.
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 TO TRUST OR NOT TRUST - MUMBAI ITAT AFFIRMS EXCLUSION OF CORPUS FUND OF OFFSHORE TRUST FROM INDIAN WEALTH TAX

Background:

Creation of private trusts have been considered as a popular method by rich families for succession planning. Trusts are a legal arrangement whereby assets are placed into the care of an individual who manages them for the benefit of someone else. Trust can be further classified into specific or discretionary based on the scheme of distribution of the trust fund. However, in recent times, offshore trust structures are suspected to be more commonly used as a means of money laundering than lawful tax planning. Consequently, the Income-tax Department has been unveiling various private offshore trusts and imposing tax liability on the beneficiary owners. This has led to an increase in reassessment proceedings and dissatisfaction among the residents for being subjected to wrongful tax liability. Recently, the Mumbai Income-tax Appellate Tribunal (“ITAT”) provided relief to Mr. Yashovardhan Birla and held that offshore trusts are considered to be acceptable form of tax planning and a beneficiary of an offshore discretionary trust cannot be taxed on the entire corpus fund merely because he has been provided with the power to appoint/ reappoint trustee. The case is discussed in detail below:
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