Meaning of Gross Receipts

In section 10(23C) there are three provision for the educational institutions -

The first one is subclause ( iii ab) - which says that the educational institutions should be not for the profit and should be wholly or substantially financed by government .

The second one is subclause ( iii ad) - The educational institution should not be for the profit and the annual receipt should not exceed Rs 1 CR .

The third one is subclause (vi) which covers the educational institution which are not for the purpose of making the profit and should not be covered above two clause - means where the govt funding is less than substantial and annual receipt is more than 1 cr , then approval from Director ( exemption ) is required .

From the reading of section 10(23C) (iiiad), it emerges that legislature had in its mind annual receipts of school or university as the case may be for consideration of exemption limit and not that of total income of society running that school or university. The society besides income from running of a school is having other sources of income also. The income from interest on FDRs is an additional income of society and it cannot be considered to be part of annual receipts of the school. Therefore, in our considered opinion assessee was eligible for exemption u/s 10(23)(iiiad) as annual school receipts did not exceed Rs. One crore.

This has been a judgement of case law ( Param Hans Swami Uma Bharti Mission Versus Assistant Commissioner of Income-tax) AUGUST 31, 2012 . You can refer this case for more detailed understanding.

Gross Receipts as defined under Income tax is total receipts during the year in any nature.

The income tax act does not define meaning of gross receipts.

But gross receipts to my understanding may include following:-

a) fees charged for tution/ other heads

b) Donations

c) amount charged for transport

d) amount charged for supply of books/stationery/uniforms

e) admission fees/capitation fees

All the receipts which are accounted for in accordance with the accounting standards will constitute gross receipts. For instance, if your expenditure is say Rs. 1 L for which you received reimbursements to the extent of Rs. 75,000/-, you need not take the reimbursements as part of the receipts and instead you may reduce the expenditure by Rs. 75,000/- and account for Rs. 25,000/-. However, if you gross up the expenditure and show the receipt separately, then such receipt will be part of your gross receipts, if this method of accounting is followed consistently.