Rules of Taxation of Private Family Trust -

Rules of Taxation of Private Family Trust

PARTICULARS	INDIVIDUALS	PRIVATE IRREVOCABLE FAMILY TRUSTS
Income tax on normal income	Taxed as per slab rates	Flat rate – MMR – 30.9% or 34.608% ( If income > 1cr)
Income tax on Capital Gains	Same Special Tax Rates	Same Special Tax Rates
Exemption u/s 54,54F available?*	Yes	No
Exemption u/s 54EC available?**	Yes	Yes
Indexation available?	Yes	Yes
Tax on receiving/giving moneys from/to close relatives?	No Tax Liability	No Tax Liability

*Section 54: Capital Gains on Sale of Residential Property and investment in a Residential Property

*Section 54F: Capital Gains on Sale of Long Term Capital Asset other than Residential Property and investing in a Residential Property

**Section 54 EC: Investing in REC/NHAI Bonds upto Rs. 50 lakhs

Understanding advance tax:

Advance tax is a form of Income Tax that is payable in case your tax liability exceeds INR 10,000 for a particular financial year. This tax must be paid by the taxpayers in the same year the income is received. For this purpose, advance tax is also known as ‘pay-as-you-earn’ scheme.

Who pays advance tax:

Advance tax is levied on all assesses including Private Family Trusts who have sources of income other than salary as TDS gets deducted from salary. This includes net income(after loss set off) that is received through capital gains on Shares/Mutual Funds, interest earned through Fixed Deposits (FDs) and rent received from house property.

Below are the due dates and calculation for Payment of Advance Tax

Due Date of Instalments	Amount Payable
On or before 15th June	15% of the Advance Tax
On or before 15th September	45% of the Advance Tax
On or before 15th December	75% of the Advance Tax
On or before 15th March	100% of the Advance Tax

What is the Interest on Late Payment of Advance Tax?

Interest under section 234C – Interest @ 1% per month is payable if the tax is not paid as per the above schedule i.e. for Deferment in Installments of Advance Tax.

Interest under section 234B – Interest @ 1% is payable if 90% of the tax is not paid before the end of the financial year till the date of payment of total tax i.e. for Default in Payment of Advance Tax.

Below documents are required for filing of Income Tax Return of Private Family Trust:

Sr. No.	Documents required
1	A copy of PAN Card of the Trust
2	A copy of Trust Deed
3	Income Tax Login Credentials if already created
4	Capital Gains Statement for the entire Financial year in excel format
5	Bank statement for the entire Financial Year
6	Details of any special transaction carried out in the Trust like distribution of assets, selling of property, etc during the year
7	PAN, AADHAR, Email ID and Mobile number of Settlor, Trustee and Beneficiary of the Trust if filing ITR for the first time

Note:

This is not a comprehensive list of requirements. This is general list, disclosure requirements may change as per amendments in Income Tax if any and hence we may require any other additional documents/ details while filing ITR as per.

Rules of Taxation of Private Family Trust

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