CBDT amends Rule 17CB to replace ‘trust or institution’ with ‘specified person’ to incorporate FA 2022 amendment

Notification no. 101/2022, dated 22-08-2022

Section 115TD of the Income-tax Act provides that trust or institution is liable to pay additional income tax on the accreted income, which arises on the conversion of trust into the non-charitable form or on transfer of assets of a charitable trust on its dissolution to a non-charitable institution.

The Finance Act, 2022 had amended provisions of section 115TD with effect from 1st April 2023 to make them applicable to any institution covered under section 10(23C)(iv)/(v)/(vi)/(via). Broadly, the amendment has been carried out by substituting the words “trust or institution” with the words “specified person” and “specified person” has been defined as follows:

(a) any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or
(b) a trust or institution registered under section 12AA or section 12AB;’.

Rule 17CB of the Income-tax Rules 1962 provides for the method of valuation of accreted income for the purposes of section 115TD.

To incorporate the changes brought by the Finance Act 2022, the Central Board of Direct Taxes (CBDT) has Income-tax (28th Amendment) Rules, 2022 to amend Rule 17CB.

Rule 17CB has been amended to replace the words “trust or institution” with the words “specified person” wherever they occur in the Rule. Further, an Explanation has been added to define the meaning of ‘specified person”. A specified person shall have the same meaning as assigned to it in clause (iia) of the Explanation to section 115TD.

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