The Bombay Chartered Accountants’ Society (BCAS) has written to the chairman of the Central Board of Direct Taxes (CBDT), saying that funds received by celebrities and stars by way of donations from friends and relatives to help migrant workers, COVID-19 patients and their families should not be taxed. This is because these funds are received by them as trustees for the benefit of others.
The BCAS has referred to the press note issued by the CBDT on June 25, which provides income-tax exemption in respect of funds received by a taxpayer from an employer or others for COVID treatment. Trustees are liable to tax in like manner and to the same extent as beneficiaries. Since beneficiaries have been exempted under the press note, trustees should also get exemption, the letter of the BCAS explains. The letter elaborates that the funds are clearly received by stars and celebrities with an “overriding diversion of title to the funds in favour of beneficiaries. Technically, the funds received by them are not taxable as they have received the funds in the capacity of trustees for the benefit of others, says the BCAS letter.