Trust & NGO Tax Calculator (Sec 11)

Calculate if your Charitable or Religious Trust is meeting the 85% Application Rule to maintain its tax-exempt status under Section 12AB.

Sec 11 Rules | FAQs

Financials for the Year

Include normal donations, grants, fees, interest, etc. (Exclude specific Corpus donations).

Application (Expenditure)

Both revenue and capital expenditures count.

Income earned but not received during the year.

Amount set aside for up to 5 years (must be in Sec 11(5) modes).

Taxable Shortfall

₹0

Your trust has met the 85% application criteria.

1. Required Application (85%)

Gross Receipts ₹0
Less: 15% Statutory Accumulation - ₹0
Required (85%) ₹0

2. Actual Application Achieved

Actually Spent ₹0
Add: Form 9A (Deemed) ₹0
Add: Form 10 (Accumulated) ₹0
Total Application ₹0

Summary

0% 85% Required 100%

You applied 0% of your total gross receipts.

Understanding Section 11 Exemption

A registered Non-Governmental Organization (NGO) or Charitable Trust in India does not automatically get a 100% tax waiver. To claim tax exemption under Section 11 of the Income Tax Act, the trust must fulfill a critical condition known as the 85% Application Rule.

The Formula

Total Income All voluntary contributions (donations), income from property held under trust, interest, etc. (Excluding explicit Corpus Donations).
15% Statutory Accumulation The law grants an unconditional flat 15% exemption. You can save/accumulate this 15% forever without paying tax.
85% Required Application The remaining 85% MUST be spent on charitable purposes within the same financial year.

What if you fail to spend 85%?

If your NGO receives a massive grant late in the year (e.g., March) and cannot practically spend it, the shortfall will be taxed at the Maximum Marginal Rate (~30%). However, you have two legal escape routes:

  • Form 9A (Deemed Application) Use this if the income became due but was not actually received in cash during the year. You must spend it in the year it is received.
  • Form 10 (Accumulation) Use this if you received the money but want to save it for a specific major project (like building a hospital). You can accumulate it tax-free for up to 5 years, provided the funds are parked in Section 11(5) modes (e.g., Bank FD).

Frequently Asked Questions

1. What is the 85% Application Rule for Trusts?
Under Section 11 of the Income Tax Act, a registered charitable or religious trust must apply (spend) at least 85% of its income during the financial year on its charitable or religious objectives to claim tax exemption.
2. What happens if a trust fails to spend 85% of its income?
If a trust spends less than 85%, the shortfall becomes taxable income unless the trust exercises options like filing Form 9A (deemed application) or Form 10 (accumulation of funds for up to 5 years).
3. What is the 15% Statutory Accumulation?
The law allows trusts to accumulate up to 15% of their total gross income indefinitely for future use, without paying any tax on it and without filing any special forms.
4. Are Corpus Donations taxable?
Voluntary contributions made with a specific direction that they shall form part of the corpus of the trust are exempt from tax, provided they are invested in modes specified under Section 11(5) (like bank FDs, post office savings, etc.). They are excluded from the 85% calculation.
5. What is Form 10 for Trusts?
Form 10 is filed when a trust wants to accumulate its unspent income (above the 15% limit) for a specific purpose for a period not exceeding 5 years. The money must be invested in Section 11(5) modes.
6. Does capital expenditure count as application of income?
Yes, capital expenditures (like buying a building or medical equipment for the trust's objectives) are treated as application of income, provided depreciation is not claimed on those assets.
7. What is the tax rate if a trust violates the conditions?
If a trust loses its exemption or has taxable income, it is generally taxed at the Maximum Marginal Rate (MMR), which is around 30% plus applicable surcharge and cess.
8. Is Anonymous Donation taxable?
Under Section 115BBC, anonymous donations exceeding 5% of total donations or ₹1,00,000 (whichever is higher) are heavily taxed at 30%, regardless of whether the trust spends 85% of its income.

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