Govt proposes tax exemption limit for non-profit entities
The government today proposed to establish a tax exemption threshold limit beyond which the income of non-profit organisations (NPOs) will be brought under the tax net.
New Delhi: The government today proposed to
establish a tax exemption threshold limit beyond which the
income of non-profit organisations (NPOs) will be brought
under the tax net.
"A basic exemption limit will be provided and the surplus
in excess of such limit will be subject to tax," said the
revised Direct Taxes Code (DTC), on which the government has
invited public comments till June 30.
The revised proposals, however, clarified that public
religious charitable institutions would continue to be tax
exempt, provided they satisfy conditions prescribed under the
Under the code, it also proposed that 15 per cent of
surplus or 10 per cent of gross receipts, whichever is higher,
would be allowed to be carried forward to be used within three
years from the end of the financial year.
It has also proposed to retain the definition of
activities pursued by the NPOs as `charitable purposes`,
rather than `permitted welfare activity` to "maintain
continuity and minimise litigation".
The DTC also retained the cash system of accounting,
since it is easy to follow and administer and proposed that
the central government would have the power to notify any NPO
of public importance as an exempt entity.
"The finer details under the DTC would have to be
examined to understand the categorisation and taxability
accordingly," KPMG India Partner Vikas Vasal said.
The government received 1,600 representations on the
first draft and has asked all stakeholders to give their views
on the revised draft by end of this month.