Anil Soni Blog

Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.

Steve Jobs

The issue of the taxability of educational institutions regarding their incomes form investments or income from properties and other sources has been controversial since long. In general educations are not liable to pay tax for the income they earn   

Conditions to be fulfilled to get the exemptions:

  1. The educations institution is not financed by the Government.
  2. The total annual receipt of the educational institution is less than Rs.100 lakh or 1crore;
  3. The educational institutions is solely for educational purposes;
  4. The institution is a non-profitable one.

Limit of the income to get benefit of the exemption:

  1. The prescribed limit of annual income of the educational institution is Rs.1crore as provided in the provisions of sections 10(23C) (111ad).
  2. The total annual receipts of the educational institution are considered not of society that runs the institute.
  3. The educational institutions availing the benefits of sections 10(23C) does not require to file return of income in view of the exemptions provided by the statute.
  4. The provisions regarding TDS are totally applicable to such institutions.
  5. When the total annual receipts are more than Rs.100 lakh, then the institution needs to comply with the conditions like that of section 11 to section 13.

When an educational institution does not get the exemption?

  1. When an educational institution, constituted only for educational purpose for education, is not involved with any educational activity in India, then it will not get the exemption for its other incomes.
  2. A trust made for purpose of education will not get the exemptions, unless it has started the activity of giving educations. Only talking of initiatives for forming an educational institution will not safe guard the assessee form tax consequences, if it has chargeable income during the previous year?