Santosh Tiwari in New Delhi
The Income Tax Department has launched a comprehensive exercise for tightening the administrative mechanism for charitable institutions.
Scrutiny of cases where misuse of tax exemption has been noticed and modifications in reporting procedures to capture their activities, funding patterns and income are among measures taken for streamlining procedures.
The Directorate of Exemption has already identified a substantial number of cases, which are being selected for scrutiny.
These cases pertain to the new proviso added to section 2(15) of the Income Tax Act, applicable from 2009-10.
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Charitable trusts under I-T scanner
Image: Department has seen misuse of exemption rules.The department noticed that despite changes in law, a large number of entities continue to claim the exemption under sections 11 and 12 of the Act.
The Directorate of Exemption now wants the exercise of selecting these cases for scrutiny to be carried out by the respective chief commissionerates.
The directorate has suggested criteria for selection of cases during the current year.
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Charitable trusts under I-T scanner
Image: New rules require disclosure of foreign contribution details.Modifications in Form No 10-B associated with the auditors' report for charitable institutions has also been planned to get full details of activities of these entities.
The proposed modified features include disclosure of nature of charitable activities and places of primary business.
Further, complete information with regard to donation by both internal and external donors with details of Foreign Contribution Regulation Act approvals would also be required in this format.
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Charitable trusts under I-T scanner
Image: New I-T return form is being prepared for charitable trusts.A new income tax return form for public charitable trusts is also being prepared by the directorate to facilitate comprehensive reporting of their income and expenditure.
It would facilitate e-filing and help in selecting cases for investigation and would also provide details of foreign, anonymous and corpus donations, donation in kind and FCRA approvals.
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Charitable trusts under I-T scanner
Image: Surplus income and capital gains will be taxed at 15 per cent.These non-profit organisations are proposed to be dealt with differently under the DTC, likely to come into force from April next year.
Under DTC, surplus income and capital gains of these entities are set to be taxed at the rate of 15 per cent.
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