Sec 12 A amendment is detrimental to charitable institutions' interests
March, 12th 2007
MR BABU ABRAHAM KALLIVAYALIL, Member, South India Regional Council of ICAI, delivering `Budget Talk 2007' organised by BL Club at Bharata Mata Institute of Management near Kochi on Saturday.
Business Line Club organised the second programme in the series of Budget Talk at Bharata Mata Institute of Management here on Saturday.
Mr Babu Abraham Kallivayalil, Member, South India Regional Council of the Institute of Chartered Accountants of India, explained to the student community the rationale of taxation process, positive indicators in the Union Budget as well as various measures and intricacies of direct taxes.
He pointed out that the amendment proposed in Sec 12 A withdrawing the power of Commissioners of Income Tax to condone the delay in making application for registration of a charitable institution from June would have tremendous tax implication on these institutions.
Mr Abraham clarified that the charitable institutions that have not taken income tax registration for claiming exemption will be required to pay tax on their net income if they fail to seek registration before June. As per the new amendment, these institutions will be eligible for tax exemption only from the date they make application under the Income Tax Act.
This could have a very serious implication on the social security sector of the country. The Legislature should take up this issue and there is a need to create public opinion in this regard for a change in the provisions, he added.
Likewise, Mr Abraham said, the Finance Bill has changed the definition of venture capital undertaking. Now the tax concessions for venture capital undertaking is available only to domestic companies engaged in the business of nano technology, hardware/software development, seed research and development, biotechnology, new chemical industries etc.
By giving concessions to only to certain companies would definitely hit the other venture capital companies. Hitherto concessions were available to any venture capital companies, he said.
According to Mr Babu Abraham, the Income Tax Department had earlier informed the assessee to rectify a mistake within 15 days if they file an IT return with a defect. Even if the defects were rectified beyond 15 days, the Income Tax Department had the power to condone such delay.
With the present amendment, the power to condone has been withdrawn. This will mean that, if defects are not rectified within the 15 days allowed, the returns will be considered as invalid.
Mr Venkatesh Natarajan, Regional General Manager (Advertising), also attended the function.