The Central Board of Direct Taxes (CBDT) recently notified rules for taxation of accreted income of Trust under section 115TD of the Income Tax Act, 1961.
The new amendment inserts Rule 17CB which provides the method of valuation for the purposes of section 115TD (2). It provided that “for the purpose of sub-section (2) of section 115TD of the Act, the aggregate fair market value of the total assets of the trust or institution, shall be the aggregate of the fair market value of all the assets in the balance sheet as reduced by-
(i) any amount of income-tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of income-tax claimed as refund under the Act, and
(ii) any amount shown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset.”
The manner of determining the fair market value of shares and securities, immovable properties, business undertaking, held by a trust or institution and other assets held by the Trust etc have been provided in the rules in detail.
As per the Rules, for the purpose of section 115 TD of the Income Tax Act, the total liability of the trust or institution shall be the book value of liabilities in the balance sheet on the specified date. This excludes the value of capital fund or accumulated funds or corpus, reserves or surpluses or excess of income over expenditure, any amount representing contingent liability, any amount representing provisions made for meeting liabilities, other than ascertained liabilities and any amount representing provision for taxation, other than amount of tax paid as deduction or collection at source or as advance tax payment as reduced by the amount of income-tax claimed as refund under the Act, to the extent of the excess over the income-tax payable with reference to the income in accordance with the law applicable thereto.
Read the full text of the Notification below.
