Is school which is registered u/s 12 A required to file return of income nd get tax audit if it’s income exceeds exemption amount
Income of Many Educational Institutions, schools and universities are exempt u/s 10(23C), there are following categories:-
- Government institutions – Those educational Institutes which are wholly or substantially financed by the Government (either Union or State) are exempted from payment of taxes under section 10(23C) sub clause iii(ab) of the Income Tax Act. This is because such educational institutes are considered to exist solely for educational purposes and not for the purpose of profit.
- The second category of educational institutions which are exempted from payment of taxes are those which exist for the purpose of education only and not for making any profit and whose annual receipts do not exceed Rs. 1 crore.
- Any educational institution which does not fall in the above two categories but have been approved by the prescribed authority for exemption may be exempted from payment of taxes on compliance of certain conditions.
Even though on many occasions, income of schools/colleges are exempt u/s 10(23C), even then they may get themselves registered as trust u/s 12A of the Income Tax Act-1961.After the trust has received the income tax certificate under section 12A, it can apply for various tax exemptions for donors as well. Such as an application can be submitted under Sec 80G for 100% deduction but there is a condition to it. The institution must be of national eminence. It can be any educational institution registered under 12A of the Act including a university.
Filing of Income tax Return by Educational Institutes:
By virtue of 139(4C) every educational institution referred to in sub-clause (iiiab) or sub-clause (iiiad) or sub-clause (vi) of Section 10(23C) whose total income in respect of which such institution is assessable, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form.
Audit of Educational Institutes:
Once the total income without giving effect to sub-clauses of 10(23C) exceeds the maximum amount which is not chargeable to tax in any previous year, the accounts are required to be audited by a qualified Accountant as per S.288(2) and should furnish such report in Form 10BB along with the return of income for the relevant assessment year.