"Life for charitable institutions and trusts will become a bit more complex
when the tax provisions of Budget 06-07 come into effect. The FM has sought
to plug a loophole that was apparently being misused by Charitable
institutions or trust all these years. The new provision will make it
difficult for an institution to receive anonymous or pseudonymous donations
by taxing unaccounted money being contributed to these institutions.
Under the existing provisions , the income of wholly-charitable or religious
trusts or institutions is exempt from tax . From now on , all anonymous
donations that attract this provision will be added to the income of the
trust /institution and will be taxed at the highest rate of 30%.
What constitutes an anonymous donation? A voluntary contribution to a trust
or institution where the institution does not record the identity , address
and other details of the person. The "other part" has not been specified,
but needs to be specified clearly by the Finance Ministry.
The institutions that will be covered under the new provision are:
universities, hospitals, schools, funds or trust set up for religious or
Source: Economic Times
The questions to be asked here are:
1. what amounts of money is the F.M taking about? Is there a cap on that?
2. what about income generation schemes for the Non- profit?( like sale of
cards, divas, etc)
3. What about small sums of money put into donation boxes ( monthly
amounting to a substantial amount)
4. what about donations received from overseas
The provisions need to be clear so that all trust /institutions comply with
the income tax requirements and not end up paying 30% of their donations to
the Income tax authorities due to any non- compliances
Poonam A. Lalvani
Add: B-1, Neelam Centre, S.K. Ahire Marg, Near Glaxo, Wori, Mumbai - 400 025
Contact nos.: 022-24910287, 022-24910288