Draft Resolution for accumulation of the fund by the Trust

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Draft Resolution for accumulation of the fund by the Trust

Trust, NGO, NPO etc are allowed to accumulate up to 15% of the income earned during the year for application for charitable or religious purposes in India in future without any restrictions and limitations.

However, if such trust wants to accumulate addition to 15% of the income subject to the compliance of the following conditions:

  1. such Trust furnishes a declaration in Form No. 10 electronically either under digital signature or electronic verification code to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and
  2. The period for which the income is to be accumulated or set apart cannot exceed five years;
  3. Such amount which is so accumulated or set apart is invested or deposited in the forms or modes specified in section 11(5);
  4. the statement i.e., Form No. 10 is required to be furnished on or before the due date specified under section 139(1) for furnishing the return of income for the previous year.
  5. While reckoning the period of five years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded.

The question arises whether it need resolution by the trust or simply the secretary can file Form No. 10.

Obviously the purpose of accumulation need to be approved by the trustee or governing body member. The secretary of the trust should file Form No. 10 only after getting the required approval of the Governing body or trustee.

Here is a draft copy of the resolution which can be passed by the trustee and then can be given to the auditor or tax consultants for filing Form No. 10

RESOLUTION FOR FY 2019-20

Governing Body meeting of __________________Trust_____________________held on _____________2020 at the Registered Office at ________________________ Dist, ___________________

ACCUMULATION OF INCOME 

Mr. __________________________________, Secretary of the trust informed the Trustees / Governing Body that an amount of Rs : ___________/- (Rupees ____________________________ Only) being ____% of the Income of the Trust for the year ending 31.03.2020 (Financial year 2019-20), relevant to the Assessment Year 2020-21, has to be accumulated as per Income Tax Act, 1961.

This amount  need to applied u/s  11 (2) of the Income Tax Act, 1961 for such accumulation, and to give intimation / notice to the Income Tax Officer / Assessing Officer concerned in Form No. 10 for accumulating the same for further utilization / application within next five years.

After discussion it has been UNANIMOUSLY RESOLVED to set apart, accumulate an amount of  Rs.  _____________/-(Rupees                       Only) being _________% of the Income of the Trust for the year ending 31.03.2020 (Financial year 2019-20), relevant to the Assessment Year 2020-21, and be accumulated u/s 11 (2) of the Income Tax Act, 1961, for the following purposes:

  1. ************************
  2. ************************
  3. ************************
  4. ************************
  5. towards the Charitable Purpose of the trust

The amount shall be be utilized / applied within the next five years.

It was further unanimously authorized  the Secretary Mr.  ________________________ to file Form No. 10 before the Income Tax Officer / Assessing Officer concerned as per the provisions of the Income Tax Act, 1961 for the purpose of said accumulation

aaaPlace :

Date :                                                                                                                                                                                                                            Secretary

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