First FCRA, now think tank CPR loses its tax-exempt status

These activities listed by the IT authorities — mentioned in the notice and reiterated in the cancellation order — include its “involvement” in the Hasdeo movement against coal mining in the Chhattisgarh forests and receipts to the tune of Rs 10.19 crore (since 2016) for its Namati-Environmental Justice Program, which were allegedly mostly used to file “litigation and complaints” rather than do research.

The crux of the IT Department’s argument is that supporting litigation is not a charitable activity and, thus, CPR stands to lose its tax exemption.

Denying these allegations, CPR is likely to file an appeal against the June 30 order in the Income Tax Appellate Tribunal (ITAT).

Responding to questions, Yamini Aiyar, President and Chief Executive of CPR told The Indian Express: “This latest decision to withdraw our tax exemption status, combined with the suspension of our FCRA (Foreign Contribution Regulation Act) license in February 2023, is a debilitating blow to an independent, highly regarded research institution that strikes at the core of its ability to function.’’

She denied allegations that CPR was carrying out activities which could be described as those of an “activist” organization. “All our collaborations and partnerships are limited to research work alone. There is absolutely no question of CPR being the voice of any collaborator, financer or partner,” said Aiyar “CPR’s voice is that of its vast array of scholars. There is also no one ‘CPR view’ but a diversity of perspectives, anchored in scholarly, credible research over the last 50 years.’’

Sources said that since the IT searches were conducted at the CPR’s headquarters in New Delhi on September 7, 2022, the think tank has been facing uncertain times.

Since a significant share of its funding came from overseas donors, its finances were severely hit once the FCRA license was withdrawn. It is learnt that the think tank has whittled down its staff and severely cut back on events and programs.

The IT also claimed “discrepancies” in CPR’s tax filings to the tune of Rs 1.43 crore for the year 2017-2018 and Rs 81.45 lakh for the year 2021-2022. It alleged that the CPR “mixed up” funds received by it under provisions of the FCRA with its core funds.

The IT also cited seven books the CPR had published and alleged that the think tank was “subsidizing” the authors but did not have any revenue from or hold ownership of the books.

These grounds, listed in the show-cause notice received by the CPR on December 22, 2022 are the very same for which it has lost its IT exemption under Section 12A of the Income Tax Act.

In the show-cause notice, I-T had even flagged 19 CPR employees, including a peon, as “non-filers” – who had either not filed or filed their tax returns irregularly. This, incidentally, does not figure in the IT’s final order to CPR cancelling its tax exempt status.