Amendments to Finance
Act 2009
Charitable Purpose
- Relief of Poor
- Education
- Medical relief
- Other useful purposes : - No trade, commerce or business like
activities
According to Section 2(15), ‘charitable purpose’, includes
relief of the poor, education, medical relief, and the advancement
of any other object of general public utility
In the recent Amendment of 2009-10 in the Finance Act 2008, following
Provision has been added:-
“Provided that the advancement of any other object of general
public utility shall not be a charitable purpose, if it involves
the carrying on of any activity in the nature of trade, commerce
or business, or any activity of rendering any service in relation
to any trade, commerce or any business, for a cess or fee or any
other consideration, irrespective of the nature of use or application,
or retention, of the income from such activity”
Impact of the amendment on NGO sector
NGOs which have any business like activates or charge any fees
or consideration from others, would not get tax exemption from the
year 2008-09. This would even cover cases where NGO publishes a
magazine and charges subscription fees and accepts advertisement
in magazines.
This change will not affect schools, hospitals, organizations which
work for the relief of the poor.
This change may affect the following kind of organizations
1. Training organizations
2. Research organizations
3. Human rights organizations
4. Micro-credit organizations
5. Environment Organizations
6. Advocacy Organizations’
7. Resource organizations
8. Chamber of Commerce
9. Professional associations
10. Fund raising organizations
11. Networking organizations
If the amendment gets in to effect, there will be two options before
the organizations such as:
· Stop the activities which can be seen as trade, business
or commercial OR
· Demonstrate that they are only working for relief of poor
or they are running schools or hospitals.
If they do not follow these rules and conditions, they need to bare
the burdone of Income Tax from the year 2008-09. (Ref: www.accountaid.org
)
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