[aaykarbhavan] CAG Exposes Defects In Law And Procedure Of Taxation Of Charitable Trusts

Dear Subscriber,

CAG Exposes Defects In Law And Procedure Of Taxation Of Charitable Trusts

The Comptroller and Auditor General of India ("CAG") has issued a hard-hitting report in which it has conducted a detailed study of the law and procedure relating to charitable trusts and identified all the short-comings therein.

The revenue loss due to the lapse runs into several thousands of crores.

One of the surprising aspects is with regard to the procedure followed by the income-tax department. The Report cites several cases where the department has issued registrations without verifying even the trust deed or the audited accounts. There are also several cases where exemption has been granted despite there being no registration.

The report also gives glaring instances of trusts that are earning huge profit and accumulating it to buy fixed assets instead of spending on charitable purposes. It also makes a pointed reference to several Tata trusts which have invested thousands of crores in prohibited modes but are still enjoying exemption.

The Report has also carefully analyzed the provisions of the Act and identified deficiencies therein that require to be addressed.

The Report offers several recommendations with regard to the reforms required to be carried out to the law and procedure so as to avoid abuse of the exemption by charitable trusts.

The Report is a must-read for all tax professionals because one can expect to see a lot of corrective action by the department in due course of time.

See also The Law And Procedure Of Taxation Of Charitable Trusts and CBDT Circular on charitable institutions and mutual organisations

(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

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