The Association for Protection of Public Trusts and Charities has urged the Union government to repeal or modify certain amendments to Finance Bill 2023 relating to charitable institutions.
More than 250 various public charitable trusts and non-profit institutions on Monday came together in Mumbai to discuss the implications of Finance Bill 2023 on charitable institutions and other such not-for-profit organisations.
They said they would submit a white paper with signatures of NGO representatives to the central government urging it to revise and reconsider its stance.
Under the Finance Bill 2023, among others, it is proposed that if one charitable organisation donates to another charitable organisation, only 85% of such donations given will be considered as application of income for the donor charitable organisation.
Which means if Trust A donates ₹1 lakh to Trust B, in the books of account of Trust A ₹100,000 will be reflected as charity given, however only ₹85,000 will qualify as ‘application of income for charitable purpose’.
The representatives of the organisations said this would prove to be a major setback for purely grant-making organisations, including corporate foundations and intermediary organisations, which work with implementing agencies at the grassroots level.
Noshir Dadrawala, CEO, Centre for Advancement of Philanthropy (CAP), said the amendments proposed are detrimental to thousands of charitable institutions across the country.
“While there is a visible ease-of-doing business, there should also be ease-of-doing charity. The charitable organisations only supplement government’s effort in the welfare and development space,” he added.
Viren Merchant, Chartered Accountant said, “The proposed amendments are discouraging charitable foundation and philanthropic institutions to do good work and reach the last mile. Disallowing 15% of the expenditure, if donations are made to another charitable organisation, clearly means suffocating small charities of funds and curbing its resources and networks.”
The association has suggested that the proposed amendments be repealed OR if required, be modified.
