More grounds proposed for cancelling registration of NGOs

Tightening the noose around NGOs, trusts and charitable institutions, government has empowered senior Income Tax officials to cancel registrations of these entities if they fail to carry out the objectives for which they were formed.
"Commissioner level officials can now cancel the registration of NGO, trust or charitable institutions if it is not carrying out objectives for which it was formed," Central Board of Direct Taxes (CBDT) Chairman R K Tiwari told PTI in an interview.
Explaining the provisions incorporated in the Budget 2014-15 documents, he said that giving loans to relatives of the trustees would constitute violation of the Section 13D of the Act and attract penal provisions, including cancellation of registration.

The Finance Bill has laid down four grounds for the cancellation of registration of trusts following which they would not be entitled for any tax benefit.
As per the new provisions, the registration of a trust could be cancelled if "its income does not ensure for the benefit of general public; it is for the benefit of any particular religious community or caste (in case it is established after commencement of Act); any income property of the trust is applied for benefit of specified persons like author of trust, trustee etc; or its funds are invested in prohibited modes".
Under the present norms, the registration of a trust can be cancelled if "the activities of a trust or institution are not genuine; or the activities are not being carried out in accordance with the objects of the trust or institution".

The decision to tighten the norms for NGOs comes against the backdrop of recent reports of the Intelligence Bureau raising questions about the working of such trusts, especially those obtaining funds from abroad.

The two recent IB reports, which were submitted to the Prime Minister's Office and other departments, had noted that NGOs were misusing the funds stalling development projects instead of using them for the intended purposes.
Several NGOs receiving overseas funding, the reports noted, used the money for fuelling protests against developmental projects relating to coal, bauxite mining, oil exploration, nuclear plants and linking of rivers.
Besides other things, the report also recommended cancellation of permission given to Greenpeace for collecting funds abroad besides reassessment of its tax compliance.