Student's corner

Dear Students,

 

BEST RESPONSE

Government shouldn’t give tax concessions for donations to educational institutes. Education business is the best way to convert black money into white. Even if government allows tax concessions upto a certain limit, businessmen who own educational institutes can claim deduction on their personal tax-liability by donating money to their own institutes. Such institutes are tax-exempted under Income Tax Act, 1961. This way, businessmen can siphon-off the money and can even claim tax-deduction. The only remedy is to set-up a National Education Fund managed by government. Donations to this fund should be exempted from tax. This will curb fake donations.

 

--  Neeraj Gupta, Xavier Institute of Management & Entrepreneurship (XIME), Bangalore.

OTHER RESPONSES:

It is very clear that the educational infrastructure is not that good in India especially in primary education. Hence it is imperative to attract donors for generating development fund. For that, tax concession is required but there should be a regulatory framework in place to monitor the usage of funds. There should be a limit on the number of donations per institute and the type of institute should be listed legally. In India, to avoid tax, people in high income bracket can use their societal presence as an easier way to avoid tax. A two way check is essential.   

-- Yukti Batra, Mudra Institute of Communications, Ahmedabad.

'Tax avoiders' in India are always on the lookout to evade taxes. Hence any effort to give permanent tax relief to the tax payers will work as a catalyst in order to improve the fiscal deficit of the government. Donating to reputed educational institutes will not only help the donors in getting tax concession but will also help to build the solid blocks of educational institutes in the country. The ripple effects of the educational can show its full strength when it is supported by the financial sound educational institutes and these step by government will help to do so.

-- Harsh Mehta, St. Kabir Institute of Professional Studies, Ahmedabad.

Most of the so-called non-profit educational trusts are already eligible for tax-breaks on their income (subject to certain conditions). But, in fact, these trusts are been operated with commercial perspective by their ‘wealthy investors’. Adding tax benefits on contributions to these educational institutes, without appropriate safeguards, will result into tax-arbitrage, where income of the recipient trust is not taxed but the contributions will be eligible for tax deduction. Moreover, effectiveness of policy of such tax-breaks is yet to be established; tax-breaks on contribution to government educational institutions like IITs & IIMs has not resulted in any sea change in situation.

-- Nikhil Pradeep Jalan, Indian Institute of Management (IIM), Bangalore.

Tax concessions can be argued to help the booming educational sector in India. However we should take this with a pinch of salt. Firstly, there is still not much transparency in terms of utilization of donations funds in private colleges. So the relevance of this in improving educational quality is questionable. Secondly, educational institutions can become tax heavens for black money which will increase corruption in this sector. So tax concessions can be feasible provided strict guidelines are imposed on the sources and uses of such funds which is challenging given the laws of our country. 

-- Manu A, Indian Institute of Management (IIM), Ahmedabad.

The donations need to be tax deductible. A simple comparison of the donations received by foreign universities and Indian universities reveal that even the institutes like IIMs, IITs, BITS receive a fraction of what their western counterparts receive from their alumni. The donations would not only allow the institutes access to better technological and human resources but also reduce their dependency on government programs. This would in turn increase their autonomy. However, provisions should be made that some amount of the donation be routed to ‘primary education’ to ensure holistic development of the education system in our country.

-- Akash Agarwal, Indian Institute of Management (IIM), Ahmedabad.

Concession should be given if donation is for those that provide free education to the poor in cities. Our country can make better use of this tax money, than giving it to profound institutes which solve internal purposes like building corporate relationships. And I believe the maximum dearth of resources in our country is at the primary level and that’s where maximum impact can be created to maximum number of people. We need to be thorough with what our country needs and hence we cannot generalize tax exemption for any kind of education donation.

-- Nitesh Agarwal, Indian Institute of Management (IIM), Ahmedabad.

Education has done wonders for the country. Educational Institutions vary along a wide range of spectrum. Over 70 per cent of rural schools without basic luxuries of teachers, infrastructures are at one end of this spectrum while posh international schools on the other. India 2020 is envisioned with a 100 per cent 'literacy' rate or education rate. Instead of filling the overflowing pot money should be given to the schools in real need of it. And rewarding tax concessions might help the cause and attract investment. In the end, it is an investment in future.

-- Rashmi Ranjan Mishra, Xavier Institute of Management and Entrepreneurship (XIME), Bangalore.

Today many  institutes look education  as an business opportunity rather than a service so donation to such institutes will serve no purpose. It will be more of an investment rather than donation. The best way will be to come up with scholarships for those who really need it or to fund an idea or a research work  which will serve the real purpose of education and can make a difference and yes government should give  tax concession to these kind of donors.

-- Rajesh Raghavan, UnitedWorld of Business (UWSB).

Educational Institutes receive large amount of donations from various organizations including businessman and in some cases alumni association from renowned institutes. No doubt the ones donating to these educational institutes possess worth billions of asset. In such a scenario, it would be advisable for the government to avoid giving tax concession to the donors. As otherwise, a tax concession by government would attract more organizations to donate toward educational institutes. But, a big question arises here, whether this money will be efficiently used or not. It would be difficult to see a major difference in majority of institutes.

-- Shivam Chhabra, Integral University, Lucknow.

Some safeguards like unconditional grants (no admission quid-pro-quo), restriction on type of schools (no elite public schools unless for means linked scholarships) are needed to ensure that incremental donations happen. In Budget 2012, it was revealed that hardly Rs 1000 crore tax exemption granted to charitable donations under 80G. [1] Any measure increasing this pittance should be welcome. While tax may not motivate donors, it certainly helps them donate more, and so tax concession is justified.

-- Arun Sundar, Xavier Institute of Management and Entrepreneurship, Bangalore.

Investment in human resource development, skill enhancement, through education and vocational training is commonly recognized as key reason for economic growth and social bonding. In order to ensure to ensure that sufficient financial resources are devoted to lifelong learning and mobility, Tax incentives should be considered but only as a complementary measure rather than the prime instrument in the policy-makers’ arsenal. Besides, Tax incentive will help government to fund education without over-burdening its expenditure. The move will also help in expansion of educational industry besides enhancing the quality education imparted in these institutions.

-- Nilaya Mitash Shanker, Indian Institute Of Technology, Roorkee.

Today education is no longer a charity but has become a big and profitable business. Some people donate to educational isntitutions as a charity. But some do it for their own greed which has actually raised the level of corruption as in the name of donation, people pay bribe for a seat in the institute. Although tax concessions should not be stopped as there are many institutions which require funds. But there should be a proper check on it and tax concessions should be given to those who donate to needy educational institutions especially those in rural areas.

-- Ankit Jain, Xavier Institute of Management and Entrepreneurship (XIME), Bangalore.

Educational institutes are running as business as huge fees is charged and quality of education is abysmal and people donating to these institutes are doing it mainly for two reasons, either to convert their black money into white money or for saving the tax, and encouragement for donation is not really needed in the case of private institutes as they already have huge pool of resources so tax concession is not needed.

-- Saim Ahmad, Faculty of Management Studies, Banaras Hindu University.

The issue of giving tax concessions to donors donating to educational institutes must be handled efficiently otherwise it could end up as another tax evading option for many. Since grants to the higher institutes abroad are tax exempted, they attract huge money flow from their alumnus who see it as a return of favour as well as another brand building exercise. Indian government must amend its laws so as to attract such cash flows for our educational institutes for research and development purposes and to avoid a situation where it is seen more of a tax evading exercise.

-- Prateek Parimal, Institute of Rural Management Anand (IRMA).

Though donation is a noble cause but this route is being used by people to park their black money into safe havens. It thus directly becomes a white money and the cause of philanthropy itself makes them white collared in society. Taxes thus helps in tracking the source of these funds. Moreover, for a fair and transparent functioning of organisations receiving grants and a proper monitoring and regulated flow of funds taxes must prevail. Thus to keep a strict vigilance over source and end means, each donation must be progressively taxed.

-- Nandish Agarwal, Galgotias College of Engineering and Technology, Greater Noida.

Today where education has emerged as business, donating to educational institutes would be an investment returning privileges like cakewalk admissions or discounts. The private institutes make self-sufficient profits at time of admissions; for the public institutes, some of which face serious infrastructure constraints, why not the government pay heed to tax revenue regulation? With over 2.5 million government school teachers paid excessively in contrast to private teachers, is there proportionate job effort when it comes to deliverance? If government tightens control and pursue strings, tax concessions can be offered for funding education of poor or medical expenses of the helpless.

-- Shaily Singh, Amity Business School, Noida.

Tax concession would loosen the purse strings of Indian bigwigs to donate for education. Though they have been making contributions, their scale has been abysmal when compared to their western counterparts. In a system where any big donation is seen by IT department as illegitimate, the tax break will create an environment that will stop people like Tata from fleeing to the west to donate. Common man is also increasingly becoming aware of where to give and the tax break will definitely make a difference to education in India which if ignored might have the spill-effects on the economy.

-- Praveen Kumar Mohan, Indian Institute of Management (IIM), Ahmedabad.

Your responses should reach us at edu@business-standard.com by Monday evening every week. Please ensure that your responses do not exceed 100 words. Avoid attachments and email your full name, institute's name, batch and complete mailing address. The student who gives the 'Best Response' will be awarded Rs 500./i>

THIS WEEK'S QUESTION: Do you think MHRD should crack down on institutes which admit students not on merit but for financial consideration?

 

 

 

LAST WEEK WE ASKED: Do you think the government should give tax concession to donors donating to educational institutes?