(a) whether Government is considering a proposal to redefine and narrow
the concept of “charitable activity†to ensure that only deserving
organizations become eligible for such benefits;
(b) if so, complete details in this regard;
(c) whether many charitable trusts are misusing the tax benefits; and
(d) if so, the details thereof and the action taken by the Government
against them during the last three years?
MINISTER OF STATE IN THE MINISTRY OF FINANCE:(SHRI S.S. PALANIMANICKAM)
(a)& (b) No such proposal is under consideration at present. Clause
15 of Section 2 of the Income- tax Act, 1961, which defines the term
‘charitable purpose’, has already been amended by Finance Act, 2008.
After the amendment, which is effective from 1st April, 2009, advancement of
‘any other object of general public utility’ shall no longer be considered
charitable if it involves carrying on of commercial or business activities
for monetary consideration.
(c) &(d) As and when instances of misuse of the tax exemption provisions
are noticed, necessary remedial measures are taken. For example, keeping in
view the suggestions made in the Final Report (December 1971) of Direct Taxes
Enquiry Committee, observations made by the Public Accounts Committee (2005-06)
in its Fourteenth Report (Assessment of Private Schools, Colleges and Coaching
Centres) and recommendations received from field-formations, an amendment was
made to the Income-tax Act, 1961 through Finance Act, 2006 by introducing
section 115 BBC to tax anonymous donations in certain cases in order to deter
the channelization of unaccounted money to charitable institutions in the
guise of anonymous donations.