Reviewed by Sep 30, 2020| Updated on
The term 'historic structure' holds significance under the Indian income tax law. According to the tax law, there are tax deductions available to the assessees for contributing to the preservation and restoration of places of historical importance or the historic structures.
Although there is no legal definition under the Indian Income Tax law for 'Historic Structure', we can understand the relevance and applicability under the definition of the term 'Charitable Purpose'. It is defined under Section 2 (15) to include relief provided to the poor, education, medical relief, yoga. Further, it includes the preservation of the environment such as watersheds, wildlife and forests, and the protection of monuments or places or objects of artistic or historical interest, and the advancement of any other objects of general public utility.
Hence, the historic structure would include monuments or places or objects of artistic or historical interest in India.
There are two types of tax assessees eligible to claim the deduction/exemption of any contribution made towards preservation of the historic structure.
First one is a charitable institution that has obtained registration under Section 12AA of the Income Tax Act, 1961. Their income earned during a financial year from a property held for a charitable purpose as defined above will be eligible for exemption. Also, the exemption includes income kept aside to be used for such charitable purposes in India, not over 15% of the income from such property.
Another case where the deduction is available is a donation made under Section 80G of the Income Tax Act, 1961 by any tax assessee whether or not individual. Any amount paid by the assessee in a financial year towards donations for renovating or repairing specific historic structures is allowed as deduction. It includes the Central Government-notified temple, mosque, gurdwara, church, or other places. Additionally, these places must be of historical, archaeological, or artistic importance, or must be a place of any public worship renowned throughout any state or states.
The deduction is restricted to only 50% of such contribution during the financial year. It is also subject to the qualifying limit. The qualifying limit under income tax refers to 10% of the adjusted total income. The adjusted total income is computed by reducing from the total gross income for all the deductions under Chapter VIA except Section 80G.
The registration must be valid for any charitable institution to claim an exemption of income earned from the property used for a charitable purpose. They must file a specific income tax return in ITR-7 by the due date applicable to them. The due date can be either 31 July of the assessment year or 30 September of the assessment year, depending upon whether they are subject to audit or not.
On the other hand, the tax assessees claiming deduction under Section 80G have to provide some details in their income tax returns. The information includes the contribution such as date of payment, PAN of the payee, amount contributed, address of the payee in their income tax returns.