The Income tax department is offering only 50 per cent tax rebate on donations made to the Haryana Corona Relief Fund. It is learnt that the department has pointed out that 100 per cent tax rebate is available for only one fund in case of Haryana — the CM Relief Fund.
Sources said around Rs 250 crore has been donated to the Haryana Corona Relief Fund, Rs 106 crore of which has been spent on relief-related tasks till now.
The state government had set up the Haryana Corona Relief Fund like the ‘Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)’, set up by the central government for providing relief to persons affected by the pandemic.
However, through an ordinance, the provisions of the Income-Tax Act were amended to provide the same tax treatment to the PM CARES Fund as available to the Prime Minister National Relief Fund. Therefore, “the donation made to the PM CARES Fund shall be eligible for 100% deduction under section 80G of the IT Act’’.
“But, in response to our communications, IT officials have informed us that the tax rebate will be only 50 per cent for the relief fund other than the CM’s Relief Fund in Haryana. We are trying to find out ways to ensure 100 per cent tax rebate on the donations. We will approach the income tax department again. If our plea is accepted, then it would be a great relief for all the donors including the employees and officers,” said an official of the Haryana finance department.
Senior IAS officer Ashok Khemka has informed the state finance department that the Haryana Corona Relief Fund may qualify for 100 per cent tax deduction, if the government sought the relief under sub clause (iiib) of the Income Tax Act’s section 80G (2) while treating the fund as a public account or a part of the state consolidated fund.
As per the Act, clause iiib provides 100 per cent tax deduction for “any fund set up by the state government to provide medical relief to the poor”.
When contacted by The Indian Express, Khemka said, “If the Haryana finance department seeks registration of the Haryana Corona Relief Fund under sub-section 80G (5), then only 50 per cent income tax rebate will be applicable.”
Haryana Additional Chief Secretary (finance) TVSN Prasad confirmed that he has received suggestions from Khemka.
“If the donors get 100 per cent income tax rebate just by putting the donated money in the consolidated fund, then we will get more donations. Currently, only 50 per cent tax rebate is being offered on the donations while Ashok Khemka says that if the money is kept in the consolidated fund, there may be 100 per cent tax reductions on the donated money. I will get it examined. We are hopeful that the issue would be resolved,” he told The Indian Express.
The Haryana government has formed a committee headed by Chief Minister Manohar Lal Khattar to administer the relief fund. Apart from the chief minister, who currently also holds the finance portfolio, five senior officers have been made members of the committee.
The government has decided to keep the funds in nationalised as well in private banks. However, Khemka has been insisting on keeping the donations in the state consolidated fund (treasury) and not as a separate fund in banks.
Sources said that a nationalised bank, where most of the corona relief fund has been parked, is offering 2.7 per cent as rate of interest for a savings account while the private bank offers interest at the rate of 3.5 per cent.
However, a section of officials say the funds should be kept in the treasury because sometimes “the government borrows money from different agencies at much higher rates than the current rate of interest being offered by banks for the corona relief fund”.
“If these funds are kept in treasury, the government would not have to borrow at least this much money at a higher rate of interest for different projects,” says an official.
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