Income of certain Universities, Hospitals, Educational Institution & Medical Institution - Section 10(23C) - Income Tax - Ready Reckoner - Income Tax

Income of certain Funds of National importance, Universities, Hospitals, Educational Institution Medical Institution - Section 10(23C) Any income received by any person on behalf of the universities, educational institution, hospitals and other medical institution and other medical v under section 10(23C) is available in the following manner (iiiab) Any university or other educational institution existing solely for educational purposes and not for purposes of profit, and which is wholly or substantially financed by the Government (iiiac) Any hospital or other institution for the reception and treatment of persons (i) suffering from illness or (ii) mental defectiveness or (iii) during convalescence or (iv) requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, and which is wholly or substantially financed by the Government. For the purposes of sub-clauses (iiiab) and (iiiac) , any university or other educational institution, hospital or other institution referred therein, shall be considered as being substantially financed by the Government for any previous year, if the Government grant to such university or other educational institution, hospital or other institution exceeds 50% of the total receipts including any voluntary contributions , as may be prescribed, of such university or other educational institution, hospital or other institution, as the case may be, then such university or other educational institution, hospital or other institution shall be considered as being substantially financed by the Government for any previous year. [ Rule 2BBB ] (iiiad) Any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed if the aggregate annual receipts of such university or educational institution do not exceed ₹ 1 crore [ Till A.Y. 2021-22 ] if the aggregate annual receipts of such university or educational institution do not exceed ₹ 5 crore [ From AY 2022-23 ] Non-applicability - It is clarified that the exemption under these clause shall not apply, if the any hospital or other institution aggregate annual receipts of the person from such hospital or hospitals or institution or institutions exceed ₹ 5 crore. (iiiae) Any hospital or other institution for the reception and treatment of persons (i) suffering from illness or (ii) mental defectiveness or (iii) during convalescence or (iv) requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, if the aggregate annual receipts of such university or educational institution do not exceed ₹ 1 crore [ Till A.Y. 2021-22 ] if the aggregate annual receipts of such university or educational institution do not exceed ₹ 5 crore [ From AY 2022-23 ] Non-applicability - It is clarified that the exemption under these clause shall not apply, if the any hospital or other institution aggregate annual receipts of the person from such hospital or hospitals or institution or institutions exceed ₹ 5 crore. (iv) Any other fund or institution established for charitable purposes which may be approved by the prescribed authority , having regard to the objects of the fund or institution and its importance throughout India or throughout any State or States. (v) Any trust (including any other legal obligation) or institution wholly for public religious purposes or wholly for public religious and charitable purposes, which may be approved by the prescribed authority , having regard to the manner in which the affairs of the trust or institution are administered and supervised for ensuring that the income accruing thereto is properly applied for the objects thereof. (vi) Any university or other educational institution existing solely for educational purposes and not for purposes of profit, which is wholly or substantially financed by the Government and which may be approved by the prescribed authority. ( via ) any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, other than those mentioned in sub-clause ( iiiac ) or sub-clause ( iiiae ) and which may be approved by the Principal Commissioner or Commissioner . To consider a university as a whole or substantially financed by government as contemplated u/s 10(23C) , funds received from government must be direct grants/contributions from governmental source and not fees collected from students under statue. Conditions for claiming exemption:- At the time of making the application in Form no. 56 or 56D, the Trust or institution shall furnish such documents including audited annual accounts which the central government or prescribed authority may consider necessary in order to satisfy itself about the genuineness of the activities of the trust or institution. It should apply its income, or accumulates it for application, wholly and exclusively to the objects for which it is established and in a case where more than 15% of its income is accumulated, the period of the accumulation of the amount exceeding 15% of its income shall in no case exceed 5 years. It should not invest or deposit its funds, other than - any asset held form part of corpus of the fund, trust or institution or any university or any other educational institution or any hospital or any other medical institution as on 1-6-1973 any asset, being equity shares of a public company, held by any university or other educational institution or any hospital or other medical institution where such assets form part of the corpus as on 1-6-1998 any assets (being debentures issued by, or on behalf of, any company or corporation), acquired by the fund, trust or institution or any university or other medical institution before 1.3.1983 where there is any accretion to the shares, forming part of the corpus mentioned in sub-clause (i) and (ii) by way of bonus shares allotted voluntary contributions received and maintained in the form of jewelry, furniture or any other article as the Board may, by notification in the Official Gazette, specify, for any period during the previous year. Amount paid or credited to any other trust other than as mentioned in 12th proviso shall be treated as application:- any amount credited or paid out of the income of any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in Section 10(23C)(iv) or clause (v) or clause (vi) or clause (via) , other than the amount referred to in the twelfth proviso, to any other fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in Section 10(23C)(iv) or clause (v) or clause (vi) or clause (via) , or trust or institution registered under section 12AB , as the case may be, shall be treated as application for charitable or religious purposes only to the extent of 85% of such amount credited or paid. [Amended by FA, 2023 ] Restriction on exemption in case of corpus donation by exempt entities to other exempt entities registered u/s 12AA Provided also that any amount credited or paid out of income of any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in Section 1023C(iv) /(v) /(vi) /(via), to any trust or institution registered under section 12AA , being voluntary contribution made with a specific direction that they shall form part of the corpus of the trust or institution, shall not be treated as application of income to the objects for which such fund or trust or institution or university or educational institution or hospital or other medical institution, as the case may be, is established. Withdrawal of Exemption: Where such fund or institution had been notified or approved by the Central Government or the prescribed authority, as the case may be, and subsequently that Government or prescribed authority is satisfied that:- (i) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not- ( A ) applied its income in accordance with the provisions specified in clause ( a ) of the third proviso; or ( B ) invested or deposited its funds in accordance with the provisions specified in clause ( b ) of the third proviso; or (ii) the activities of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution- ( A ) are not genuine; or ( B ) are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved, it may, at any time after giving a reasonable opportunity of showing cause against the proposed action to the concerned fund or institution or trust or any university or other educational institution or any hospital or other medical institution, rescind the notification or, by order, withdraw the approval.