Income derived from property held under trust or of an institution wholly for charitable/religious purposes is exempt if 85% of the income is spent on the objects of the trust during the year. Hence, charitable or religious institution are not subject to tax, provided they follow all the conditions of registration as well as the compliance with regard to the application of income. Therefore, the tax liability is in the nature of a penalty against any violation of the provisions of the Act. If the amount spent on the objects of the trust during the year is less than 85% of the income, the shortfall is taxable. Sections 11 to 13 provide various situations that result in non-compliance and the implication for such non-compliance. In the event of non-compliance, such incomes shall not be subject to application and/or the benefit of section 11 and 12 will be withdrawn or the registration status will be lost for that particular year of non-compliance. In this issue, we discuss the provisions of section 115BBI which become applicable when an organization fails to comply with the conditions under section 11 with regard to application of income. For details, please read this issue of Standard & Norms