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As per the provisions of the Income
Tax Act 1961, every association of persons needs to
file its income tax retums if their total income during
a financial year exceeds the maximum amount which is
not chargeable to tax, i.e.Rs.50000/-
The said amount of Rs.50000/- is to
be, calculated after, reducing Deductions available
under the Act, like under Section 80-L of the Act, wherein
Interest etc. income to the extent of Rs.12000/- is
deductible.
To calculate the taxable income of
the Lodge, following points need to be considered:-
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The Lodges are independent assessees
& are to be taxed under the status of Association
of persons for the income earned by them in any
financial year.
-
Accounts of the Lodges need to
be prepared on financial year basis i.e. from
April to March & either cash/receipt or mercantile/due
basis needs to be adopted for preparing the accounts.
In other words, the Lodges can
either make accounts showing the incomes actually
received & expenses actually paid during a
financial year(i.e. CashlReceipt System)
Or, show the incomes & expenditure
on due basis, i.e. after making provision for
receivables & payables(i.e. Mercantile System).
Mixed method of accounting is
not allowed & either system needs to be employed
on a regular basis.
-
The income earned by Lodges from
members subscriptions/dues etc. are not chargeable
to tax, i.e. not be included while calculating
taxable income.
Only the income earned from
Other Sources, like Interest on FDR's units etc.
are taxable & are to be included for calculating
tax thereon. Interest Income upto Rs.12000/- is
however deductible therefrom under Section 80-L
of the Act.
Hence, only if the income of
the Lodges from Interest ctc. (aftcr deducting
Rs. 12000/-) exceed Rs.50000/-, the Lodge needs
to file its Income Tax return for the said year.
- In case the Income of the Lodges exceed Rs.50,000/-
the Lodge may avoid taxation by making donation
to any trust/society registered u/s 80-G of the
Income Tax Act' 1961. The said donation can be given
upto maximum of 10% of its taxable income. The Lodge
can avail deduetionu/s 80-G @ 50% of the amount
donated from its taxable income.
The said donations can be either given to the
Grand Lodge of India - Fund of Benevolence or
to the Regional Grand Lodges' Funds of Benevolence(ifthe
same are registered u/s 80-G).
In the alternative, the Lodges themselves can
form a separate Charitable trust of their own
and execute a Trust deed for the said purpose,
have it registered under the Indian Trust Act
& u/s 12A(a) & 80-G of the income Tax
Act' 1961.
Lodges can then make these donations to the said
Trust & claim deduction u/s 80-G of the Act
from their taxable income.
We hope that your Lodge will take the necessary
action in this regard & file your Lodge's
returns, if applicable, at the earliest possible
& avoid any penal consequences under the Income
Tax Act, 1961.
The Grand Lodge of India as the parent body of
your Lodges has considered it as our responsibility,
to advise you about the legal/taxation provisions
applicable to your Lodge.
In case of any doubt/difficulty/clarification on
the subject you may contact the undersigned.
With greetings,
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