Budget makes it easier for Govt to shut down NGOs and trusts

The explanatory memorandum in the Budget document explains that often NGOs ask for such relaxation.

Written by Anil Sasi , Subhomoy Bhattacharjee | New Delhi | Published:July 11, 2014 2:41 am

Not just an Intelligence Bureau blacklist, the government’s crackdown on NGOs continues into the Budget.

The Finance Bill, 2014, has brought in a series of amendments in Sections of the Income Tax Act, which cover tax exemption for NGOs, trusts and charitable institutions, that give sweeping powers to the government — from  withdrawing tax benefits or cancelling their registrations.

The current provisions, under Section 12AA of the Income Tax Act, for cancellation of registration by a principal commissioner or commissioners of Income Tax were only two: when the department  found that the activities of the organisation were “not genuine” or if the “activities were not being carried out in accordance with the objects of the trust or institutions”.

Now the Bill proposes to amend this Section by defining four more grounds for cancellation if the institution’s activities are being carried out in such a manner that:

* its “income does not enure for the benefit of general public”

* “it is for benefit of any particular religious community or caste”

* “any income or property of the trust is applied for benefit of specified persons like author of trust…”

* its “funds are invested in prohibited modes”

These amendments vastly expand the powers of the income tax authorities to clamp down on activities of NGOs that the government may not wish to see expand its role. The amendment doesn’t spell out what “benefit of general public” or “prohibited mode” means. Its interpretation is, possibly, left to the discretion of the principal commissioner or commissioners of income tax.

The Finance Bill has also tightened the rules under which an NGO or a trust can seek tax exemption for money it has received from the sale of a property “held under the trust”. The explanatory memorandum in the Budget document explains that often NGOs ask for such relaxation.

But it has clarified that when an NGO has got a tax exemption under Section 11 of the Income Tax Act which does not allow for such sale or transactions, it cannot ask for a switch over to another section 10(23c) of the Act to claim the tax exemption.
Shyamal Mukherjee, Executive Director of Price wate rhouse Coopers said the restrictions through these provisions are clearly meant to make it difficult for the NGOs to switch around funds. Activist Harsh Mander said the changes appeared to be “discretionary” in nature. “I have not read the fine print,” he said, “but the changes (in the Finance Bill) do appear to offer immense discretion to the tax authorities for cancelling the registrations (of trusts or NGOs).”

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  1. S
    Subrata mahanta
    Jun 24, 2015 at 1:33 pm
    Sir New ngo making plz Help me mobile 919635850723
  2. D
    Jul 11, 2014 at 4:33 pm
    media, ngos, judiciary, cbi, army - all these need to be brought under control of hindus so that motherland can be protected and hindutva rules over India ..without sham of democracy....and need for costly elections...and cultural organisation which protects hindu culture is established in permanent power.
  3. S
    Jul 11, 2014 at 5:42 am
    The foreign NGO´s must be shut down. They are not loyal groupingsdia don´t need the NGO´s. It can solve its own problems. They arespying-networks of foreign countries with the aim to destroy the Hindureligion, culture and tradition. They are enemies of Hindustan.
  4. S
    Jul 11, 2014 at 9:23 am
    Excellent! These NGOs should be made accountable. They think they are indispensable and they think they are serving the public. Neither umption is necessarily correct and the latter may just be a pretense.
  5. G
    Jul 11, 2014 at 6:37 am
    the genuine NGOs will have no problems complying; and this will substantially reduce the numerous worthless NGOs cropping up everywhere.
  6. M
    Mohanlal Com
    Jul 12, 2014 at 6:04 am
    Excellent decision! Especially those NGO's bringing crores into India and using that for anti-national activities, like Marad macre (Kerala), m conversion (Tamil nadu) , will feel the heat.
  7. S
    Jul 11, 2014 at 5:31 pm
    WOW- I do hope you realise - industry, government, political parties in India all recieve crores and crores in foreign funding ! Then shouldnt the BJP/RSS shut down too then - do you know the 1000's of crores of foriegn funding they have recieved? or the 1000's of crores of FDI investment that Modi and BJp is thriving on. So if you are a foreign company or invester , the red carpet will be laid for you, you will be allowed to per our natural resources, destroy livelihoods of farmers, dalits , tribals - all of which is not anti national , but if people protest or compaign or create awareness about these issues , they are going to be witch hunted , called out as traitors , anti national, clamped down upon . Simply because they get support of like minded people and concerned citizens and organisations of the world connecting to them on huminatarian and principled grounds !! waah bhai waah - acche din sach mein aa en hain - hamare modi bhakton ke liye !!!!
  8. R
    Radhakrishnan Parameswaran
    Jul 11, 2014 at 12:43 am
    It is a good move in the context of the revelation by the IB on the activities of the NGO. The discretionary power to the Tax authorities is reasonable as they are many cirstances and the NGOs always look for a loop to achieve their own hidden agenda. Let them prove to the Tax authorities why their licences should not be cancelled in a particular cirstance.
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