Section 115TD

Section 115TD — the law in short

What the courts have decided on section 115TD, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Sarvajanik Seva Trust v DCIT ITATHelps taxpayerValidity unconfirmed
  The CPC has processed my trust's return at the maximum marginal rate, saying s.115TD applies. But the trust gave up its registration back in March 2015. Can s.115TD reach it at all?
  Not on those facts. Section 115TD was inserted by the Finance Act 2016; the order records it as taking effect from 1 June 2016 in one place and from assessment year 2016-17 in another. On either date, where the trust's registration had already ceased with effect from 20 March 2015 there was no registered trust for the section to bite on, and the total income had to be charged at the slab rates and not at the maximum marginal rate.
• Statutory position — section 115TD: the exit tax on accreted income, and the Finance Act 2022 extension to a mere failure to re-apply in time CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  We simply missed the deadline for the fresh application under s.12A(1)(ac). We have not been cancelled and nobody has rejected anything. Can the exit tax under s.115TD really apply to us?
  Yes. Since the Finance Act 2022, s.115TD(3)(iii) deems a specified person to have been converted into a form not eligible for registration where it simply fails to make the application required by s.12A(1)(ac)(i), (ii) or (iii), or by the corresponding clauses of the first proviso to s.10(23C), within the period specified, where that period expires in the previous year. The consequence is tax on accreted income at the maximum marginal rate, payable within fourteen days of the end of that previous year, in addition to any income tax otherwise chargeable, with no credit and no deduction against it.
• CBDT Circular 3/2017 CBDT Circulars & InstructionsHelps departmentSuperseded by amendment
  My trust is surrendering registration or merging. What is the s.115TD tax on accreted income?
  An additional tax at the maximum marginal rate on accreted income — the fair market value of total assets less liabilities on the specified date — triggered by conversion into a non-charitable form, merger with a non-eligible entity, or failure on dissolution to transfer assets to another eligible institution within twelve months. It is a levy on the net asset position, not on the year's income.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.