Federations and fora representing various charitable trusts and minority institutions have urged the Centre to redraft sections of the Direct Tax Code Bill 2010 (DTC Bill), that propose to tax donations received by charitable institutions that are meant to serve certain minority or community groups.

The federations and fora held a meeting of stakeholders - such as trusts running minority educational institutions, hospitals, schools, etc - to create awareness on the financial strain the Bill promises to bring to them.The clause in question in the DTC Bill that the Centre is looking to pass and bring in force by 2012, exempts trusts or institutions from availing income tax exemption on donations if they are meant to serve any particular minority or community group.
To be more precise, the DTC Bill proposes a 30 per cent tax on donations received by institutions as long as they dont promise to serve all communities, instead of focusing on any one particular group.

The Forum of Minority Institutions & Associations and the Federation of Charitable & Religious Trusts have attacked the DTC Bill provisions on a variety of levels, ranging from taxation philosophy and jurisprudence to practicality and compassion.It is not the trustees of these outfits that are going to be affected by the 30 per cent tax. It is the beneficiaries of the charitable endeavours of these trusts, noted senior tax analyst H P Ranina, who also happens to be on the Central Board of Directors of the RBI. If this comes through, the trusts would have 30 per cent less money to spend on services and schemes they pass on to the deprived lower sections of society. The donor is not going to be taxed. But why would anyone donate to trust knowing 30 per cent of their donation is not going to reach the beneficiaries. A number of our important educational institutions and hospitals are run by such institutions.
 
Senior advocate YH Muchhala criticised the provisions of the DTC Bill on the grounds that it was against the taxation philosophy of economist Adam Smith, which is the current norm.