Income Tax Act, 2025
Section 1: Ins. by Act 28 of 2016, s. 60 (w.e.f. 12016).
1. Ins. by Act 28 of 2016, s. 60 (w.e.f. 12016).
505
1[CHAPTER
XIIEB
SPECIAL PROVISIONS RELATING TO TAX ON ACCRETED INCOME OF CERTAIN TRUSTS AND
INSTITUTIONS
115TD.Tax on accreted income.—(1) Notwithstanding anything contained in this Act, where in any
previous year, a trust or institution registered under section 12AA has—
(a) converted into any form which is not eligible for grant of registration under section 12AA;
(b) merged with any entity other than an entity which is a trust or institution having objects
similar to it and registered under section 12AA; or
(c) failed to transfer upon dissolution all its assets to any other trust or institution registered
under section 12AA or to any fund or institution or trust or any university or other educational
institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v)
or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, within a period of twelve months
from the end of the month in which the dissolution takes place,
then, in addition to the income-tax chargeable in respect of the total income of such trust or institution,
the accreted income of the trust or the institution as on the specified date shall be charged to tax and such
trust or institution, as the case may be, shall be liable to pay additional income-tax (herein referred to as
tax on accreted income) at the maximum marginal rate on the accreted income.
(2) The accreted income for the purposes of sub-section (1) means the amount by which the aggregate
fair market value of the total assets of the trust or the institution, as on the specified date, exceeds the total
liability of such trust or institution computed in accordance with the method of valuation as may be
prescribed:
Provided that so much of the accreted income as is attributable to the following asset and liability, if
any, related to such asset shall be ignored for the purposes of sub-section (1), namely:—
(i) any asset which is established to have been directly acquired by the trust or institution out of
its income of the nature referred to in clause (1) of section 10;
(ii) any asset acquired by the trust or institution during the period beginning from the date of its
creation or establishment and ending on the date from which the registration under section
12AA became effective, if the trust or institution has not been allowed any benefit of section
11 and 12 during the said period:
Provided further that where due to the first proviso to sub-section (2) of section 12A, the benefit
of section 11 and 12 have been allowed to the trust or the institution in respect of any previous year or
years beginning prior to the date from which the registration under section 12AA is effective, then, for the
purposes of clause (ii) of the first proviso, the registration shall be deemed to have become effective from
the first day of the earliest previous year:
Provided also that while computing the accreted income in respect of a case referred to in clause (c)
of sub-section (1), assets and liabilities, if any, related to such asset, which have been transferred to any
other trust or institution registered under section 12AA or to any fund or institution or trust or any
university or other educational institution or any hospital or other medical institution referred to in subclause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, within the
period specified in the said clause, shall be ignored.
Notwithstanding anything contained in this Act, where in any
previous year, a trust or institution registered under section 12AA has—
converted into any form which is not eligible for grant of registration under section 12AA;
merged with any entity other than an entity which is a trust or institution having objects
similar to it and registered under section 12AA; or
failed to transfer upon dissolution all its assets to any other trust or institution registered
under section 12AA or to any fund or institution or trust or any university or other educational
institution or any hospital or other medical institution referred to in sub-clause
or sub-clause
or sub-clause
or sub-clause
of clause
of section 10, within a period of twelve months
from the end of the month in which the dissolution takes place,
then, in addition to the income-tax chargeable in respect of the total income of such trust or institution,
the accreted income of the trust or the institution as on the specified date shall be charged to tax and such
trust or institution, as the case may be, shall be liable to pay additional income-tax (herein referred to as
tax on accreted income) at the maximum marginal rate on the accreted income.
The accreted income for the purposes of sub-section
means the amount by which the aggregate
fair market value of the total assets of the trust or the institution, as on the specified date, exceeds the total
liability of such trust or institution computed in accordance with the method of valuation as may be
prescribed:
Provided that so much of the accreted income as is attributable to the following asset and liability, if
any, related to such asset shall be ignored for the purposes of sub-section
any asset which is established to have been directly acquired by the trust or institution out of
its income of the nature referred to in clause
of section 10;
any asset acquired by the trust or institution during the period beginning from the date of its
creation or establishment and ending on the date from which the registration under section
12AA became effective, if the trust or institution has not been allowed any benefit of section
11 and 12 during the said period:
Provided further that where due to the first proviso to sub-section
of section 12A, the benefit
of section 11 and 12 have been allowed to the trust or the institution in respect of any previous year or
years beginning prior to the date from which the registration under section 12AA is effective, then, for the
purposes of clause
of the first proviso, the registration shall be deemed to have become effective from
the first day of the earliest previous year:
Provided also that while computing the accreted income in respect of a case referred to in clause
of sub-section
or sub-clause
or sub-clause
or sub-clause
of clause
of section 10, within the
period specified in the said clause, shall be ignored.