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Hema Ramakrishnan

NEW DELHI, April 21

A HOST of representations from sports bodies to restore income-tax breaks have not cut ice with the Finance Ministry. The Revenue Department has virtually ruled out any roll back in the Budget proposal to scrap tax breaks for all sports bodies under Section 10 (23) of the Income-Tax Act 1961. According to senior officials, the Finance Ministry is not inclined either to ease the norms on accumulation of income by charitable trusts despite pressure to do so from sections of the industry.

While post-Budget representations have been received on several Budget proposals, the Revenue Department is focussing mainly on the review of two key provisions in the Finance Bill - taxation of dividends at the hands of the shareholder and the reduction in income tax rebate available under Section 88 on investments made in designated savings instruments.

Senior officials reckon that there is really no case for a review of the Budget proposal on the revised norms for accumulation of income by charitable institutions as the decision was taken after a detailed examination of the recommendations of an internal Working Group set up by the Revenue Department.

The Group looked at streamlining the functioning of these institutions and rationalising tax breaks granted to them.Currently, trusts can accumulate up to 25 per cent of the income for an indefinite period without any conditions. The balance can be accumulated for five years, subject to prescribed conditions.

The Finance Bill 2002 has, however, proposed more stringent norms. If the provisions in the Bill are pushed through without official amendments, charitable trusts can accumulate 100 per cent of the income up to a maximum period of five years subject to prescribed conditions.

Inter-trust donations also can be made from the corpus or from the current year's income. The Institute of Chartered Accounts of India (ICAI) has reportedly mooted a one-year extension in the time period.

Tax authorities are also set to be empowered to denotify these institutions if they contravene conditions specified by the Government including those on end use of funds.

Moreover, these notified institutions, trusts, news agencies, trade unions, educational institutions, scientific and research institutions would also be required to compulsorily file yearly returns. Such a stipulation has, however, not found favour with some sections of the industry. The only respite for these institutions is that they will be free from mandatory publication of accounts in a local newspaper.

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