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21,000 unregistered trusts got tax breaks: CAG

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NEW DELHI: A comptroller and auditor general (CAG) report on the income tax department has revealed that more than 21,000 charitable trusts, which had not been registered for exemption, were granted tax breaks of Rs 18,800 crore between assessment year (AY) 2014-15 to 2017-18.
The highest exemptions of Rs 4,245 crore were availed by 1,345 such trusts based in Delhi, followed by Maharashtra where 3,745 trusts were allowed exemption of Rs 2,500 crore, over 2,100 trusts in UP availed Rs 1,800 crore tax free income, while 299 trusts in Chandigarh for Rs 1,600 crore. Madhya Pradesh had more than 770 such trusts availing exemption of over Rs 1,595 crore and over Rs 1,000 crore exemptions each claimed by trusts under similar conditions in Gujarat, Andhra and Karnataka. Interestingly, the auditor, in its report tabled in Parliament on Monday, found at least 347 trusts received foreign contributions despite not even having foreign contribution regulation act (FCRA) registration.
Charitable trusts are required to obtain registration under Section 12AA of the I-T Act for claiming exemptions on their income under section 11 of the act. “From the data provided by the principal director general of I-T (systems), pertaining to I-T returns for assessment year 2014-15 to 2017-18, audit found that in 21,381 cases exemption were claimed under Section 11. However, registration under Section 12AA was not available,” the report said. These trusts are required to obtain registration under FCRA for receiving foreign contributions. In 347 cases, the CAG said, foreign contributions were received though registration under FCRA was not available. The audit found that Karnataka had the highest receipt of foreign contribution without registration under FCRA Act, followed by Andhra Pradesh and Telangana.
One wonders how such a huge number of charitable trusts can get tax exemption without even applying for it, or receive foreign contributions without FCRA registration. There should be a probe to find out who granted these exemptions, on what grounds, and if there was any quid pro quo in granting them.

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