| To curb the misuse of tax exemption given to charitable organisations, the government will now closely scrutinise accounts of large entities, which include NGOs and trade bodies, after it was found that some of them were allegedly indulging in commercial activities.
More than 60,000 assessees in seven metropolitan cities are claiming tax exemption under the Income-Tax Act.
Large entities will now be closely scrutinised to check revenue loss, a Finance Ministry official said.
Tax statements filed by such entities are by using the ITR-7 form, whose electronic version is not available, the official said, adding the voluminous paperwork involved makes it difficult to ascertain the revenue loss.
According to I-T department officials, the Comptroller and Auditor General (CAG) and the higher courts of the country had also asked the department to scrutinise the accounts of such entities effectively.
"The effort of the government and the Central Board of Direct Taxes (CBDT) is to make sure that no non-deserving business entity or institution is added to the list," a source said.
The government, through the Tax Policy and Legislation division of the CBDT on December 19, 2008, brought out a circular in this context, which defines charity.
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