Getting charitable, religiously

CHARITABLE DONATIONS

Donations to educational and health-related wholly religious institutes and trusts will get full exemption.

No one can now explore anonymous charitable pursuit as a viable option to economise on tax out-goings. Finance Minister P Chidambaram has specified in the Budget that all anonymous and pseudonymous donations to charitable institutions will be taxable at the highest marginal rate.

The move comes against the backdrop of concerns expressed by the Standing Committee on Finance on detecting misuse of the income-tax provisions by many charitable institutions. There is also a need to restrict circulation of unaccounted black money within the economy under the guise of charities.

However, donations made by individuals to partly-religious and partly-charitable institutions/ trusts will fall under the taxable bracket only if aimed at educational or medical purpose.

On the other hand, Chidambaram has exempted donations directed at educational and health-related activities "� those which are made to wholly religious institutions and religious trusts "� from the new provision.

With the introduction of such a provision, it is implied that all charitable and religious institutions will now begin insisting on personal details of donors to avoid coming under the scanner of taxation authorities.

Speaking to Business Standard, a senior official from a non-government charitable institution said that most NGOs these days insist on the donor furnishing details of their permanent account number (PAN) on donations exceeding Rs 10,000. However, industry does not foresee this provision restricting fund inflows to charitable institutions.

Though customers cannot claim an exemption under these circumstances, it is still not deemed illegal to donate anonymously, an NGO official pointed out.