Surplus fund of the Charitable entities should be invested as per forms and modes prescribed u/s 11(5) of Income Tax Act.
1. Investment in savings certificates as defined in clause (c) of section 2 of the Government Savings Certificates Act, 1959 (46 of 1959),and any other securities or certificates issued by the Central Government under the Small Savings Schemes of that Government.
2. Deposit in any account with the Post Office Savings Bank.
3. Deposit in any account with a scheduled bank or a
co-operative society engaged in carrying on the business of
banking (including a co-operative land mortgage bank or a
co-operative land development bank.)
4. Investment in units of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963).
5. Investment in any security for money created and issued by the Central Government or a State Government.
6. Investment in debentures issued by, or on behalf of, any company or corporation both the principal whereof and the interest whereon are fully and unconditionally guaranteed by the Central Government or by a State Government.
7. Investment or deposit in any public sector company Provided that where an investment or deposit in any public sector company has been made and such public sector company ceases to be a public sector company,-
(A) Such investment made in the shares of such company shall be deemed to be an investment made under this clause for a period of three years from the date on which such public sector company ceases to be a public sector company;
(B) Such other investment or deposit shall be deemed to be
an investment made under this clause for the period up to
the date on which such investment or deposit becomes
repayable by such company;
8. Deposits with or investment in any bonds issued by a
financial corporation which is engaged in providing long
term finance for industrial development in India and which
is eligible for deduction under clause (viii) of sub-section
(1) of section 36.
9. Deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long term finance for construction or purchase of houses in India for residential purposes and which is eligible for deduction under clause (viii) of sub-section (1) of section 36.
9A Deposits with or investment in any bonds issued by a public company formed and registered in India with the main object of carrying on the business of providing long-term finance for urban infrastructure in India.
Explanation For the purposes of this clause-
a. long term finance means any loan or advance where the terms under which moneys are loaned or advanced provide for repayment along with interest thereof during a period of not less than five years;
b. public company shall have the meaning assigned to it in section 3 of the Companies Act., 1956 (1 of 1956);
c. urban infrastructure means a project for providing potable water supply, sanitation and sewerage, drainage, solid waste management, roads, bridges and flyovers or urban transport.
10. Investment in immovable property.
Explanation-Immovable property does not include any
machinery or plant (other than machinery or plant installed
in a building for the convenient occupation of the building)
even though attached to, or permanently fastened to,
anything attached to the earth.
11. Deposits with the Industrial Development Bank of India established under the Industrial Development Bank of India Act., 1964 (18 of 1964)
12. Any other form or mode of investment or deposit as may
be prescribed.
Forms and modes of investment prescribed under clause 12 of
Section 11(5)
1. Investment in the units issued under any scheme of the mutual fund referred to in clause (23D) of section 10 of the Income-tax Act, 1961.
2. Any transfer of deposits to the public Account of India.
3. Deposits made with an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both.
4. Investment by way of acquiring equity shares of a depository as defined in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996).
Income Tax PAN FAQ, Answers & Guidance
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