Rs. 3,000 cr of tax exemption availed in charity’s name

Charitable trusts and institutions across the country wrongfully availed of tax exemptions worth Rs 3,000 crore which they didn’t deserve, a government official told HT.

Charitable trusts and institutions across the country wrongfully availed of tax exemptions worth Rs 3,000 crore which they didn’t deserve, a government official told HT.

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The findings comprise a report by the Comptroller and Auditor General (CAG) which has already been approved and signed but which could not be presented in the just-concluded Monsoon session of parliament. It is now expected to be tabled in the Winter session of Parliament.

“CAG had identified about 1 lakh charitable trusts and institutions for performance auditing, but finally the accounts of only about 80,000 charitable trusts and institutions could be audited wherein this wrongful exemption by the income tax authorities to the tune of Rs 3,000 crore was detected,” the official said on condition of anonymity.

There are more than six lakh charitable institutions in the country that are registered with the income tax authorities.

The assessment of 80,000 accounts showed wrongful assessment relating to procedural lapses and irregularities in correct application of income, irregular donations, cases of diversion of funds for non-charitable purposes and other omissions.

Donors who contribute to such organizations can also claim tax deduction to the extent of a specified proportion of their contribution (50% in most cases).

Under Indian tax laws, institutions and trusts with a ‘charitable purpose’ are given tax exemptions. Charitable purpose is defined as relief of the poor, providing education or medical relief, or advancement of any other object of general public utility.

In the last couple of years, with Vinod Rai as CAG, several reports damning many politicians and important bureaucrats including on the 2010 Commonwealth Games at New Delhi, allocation of telecom licenses, coal blocks allocation, farm loan waivers, etc. had snowballed into major controversies with huge political aftershocks.

Rai retired in May and was succeeded by former defence secretary Shashi Kant Sharma.

Among a slew of CAG reports being processed for approval and which are expected to be tabled in the next Parliament session include performance audits on the pricing of petroleum products, Public Private Partnership projects in Indian Railways, etc.