E-Paper
Charitable institutions to be exempted from property tax: Chandigarh MC
The agenda for giving exemption to charitable institutions will now be placed before the MC General House for its approval on December 31
The municipal corporation (MC) is in the process of bringing in a policy to exempt charitable organisations and institutions from paying property tax.
Under the policy, the buildings and lands of non-profit organisations that undertake charity work will be exempted, provided their property is not being used for any commercial activity. The MC charges property tax at the rate of ₹10 per square foot from institutional buildings.
“Institutions that are involved solely for public causes and for the benefit of the society, with no motive of profit generation, should not be burdened with tax liabilities,” said an MC official, privy to the development.
The MC gives property tax exemptions to the economically weaker sections, defence personnel and veterans, widows, differently-abled people entitled for benefits under the I-T Act and religious institutions (except areas being used for commercial activity).
MC panel recommendations
The matter was placed before the MC House’s tax assessment committee for the first time on September 12, 2019, and was approved.
The recommendations of the committee were placed before the MC General House in its meeting held on November 26, 2019. But the House considered and deferred the agenda.
Again the matter was placed in the tax assessment committee on December 18, and the committee unanimously decided to exempt charitable institutions.
Certain conditions for the institutions to avail the exemption were, however, laid down.
Must be registered under Charitable Endowment Act
The committee stated that such an institution should be registered under the Charitable Endowment Act. The institutional building must have the benefit of deduction under sections 12AB and 80G of the Income Tax Act.
No commercial activity
The exemption will be given only if there is no commercial activity being carried out from the premises of an institution seeking such an exemption. The institution would also have to give an undertaking to the MC that no commercial activity was being carried out. If at any stage any commercial activity is noticed, the institution will be liable to pay full tax from the date of exemption.
The agenda for giving exemption to charitable institutions will now be placed before the MC General House for its approval on December 31.
In 2019-20, the MC had collected ₹52 crore in tax, covering over 80% assessees across all categories. This year, the MC has already crossed its target of ₹49 crore in property tax collections, and has revised it to ₹54 crore.
