Abstract

Charitable trusts, intrinsic to societal welfare and economic progress, have historically enjoyed tax exemptions under the Income Tax Act. Under the Income Tax Act, the article explores the intricate procedures associated with the registration of charitable trusts, a prerequisite for claiming tax exemptions. It illuminates the spectrum of income exemptions available to these trusts, emphasizing activities aligned with their philanthropic purposes. However, the tax landscape underwent a substantial transformation with the Goods and Services Tax (GST) implementation in 2017, simplifying intricate central and state tax structure. The GST Act outlines specific activities of non-governmental organizations (NGOs) and charitable trusts falling within the realm of business, subjecting them to tax liabilities. Within the tax domain, duly registered charitable entities under the Income Tax Act continue to benefit from tax exemptions on their earnings. Nevertheless, the process of attaining such exemptions now faces heightened scrutiny from tax authorities. This more suitable oversight goal is to make certain that deserving institutions acquire exemption benefits while stopping the misuse of provisions. However, this heightened regulatory oversight and the subsequent rise in administrative complexities and compliance requirements have disproportionately pressured smaller charitable companies, hindering their operational efficiency and competencies. This article offers a comprehensive comparative study of the effectiveness of current legislative frameworks in delivering an appropriate balance between granting earnings tax exemptions and ensuring accountability.

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