What percentage of annual turnover of a non-profit with 12A certificate can be its business income without paying tax?
Thanks for the query.
A non-profit organization can have incidental business income adjunct to its objects. It cannot do pure commercial activity. The business income for the first six limbs i.e. relief for the poor, medical relief, yoga, education, preservation of environment and preservation of monuments does not have a monetary ceiling but if the incidental business income falls under the sixth limb, i.e. advancement of object of General Public Utility (GPU), that has a ceiling of 20% of total receipts during that year. In addition, separate books of accounts need to be maintained for such incidental business income.
Hope it clarifies.
CS Sharad Bhargava
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