Charities too may ride bull as Montek moots tax sop for share donations
May, 25th 2007
Voluntary organisations (VOs) may be allowed to take donations in the form of shares and stock options. The government is also considering to extend tax exemptions for the same.
Stocks and shares have become a significant form of wealth in the country today. In order to encourage transfer of shares and stock options to voluntary organisations, the government will consider suitable tax rebates for this form of donation, Planning Commission deputy chairman Montek Singh Ahluwalia said unveiling the National Policy on Voluntary Sector.
The policy suggests continuing fiscal concessions for VOs. The government will also simplify and streamline the system for granting tax exemption status to charitable projects under the Income Tax Act it says.
Elaborating on the policy, Mr Ahluwalia said it had suggested tightening of administrative and penal provisions to discourage misuse of tax concessions by VOs. The government will consider tightening administrative and penal procedure to ensure these incentives are not misused by paper charities for private financial gains, the policy says. The policy also seeks to ensure proper accountability and monitoring of public funds distributed to the VOs.
On monitoring and registration of VOs, Mr Ahluwalia said that the government is in favour of issue being addressed by the voluntary sector through suitable self-regulation. The government would encourage evolution of a national-level self regulatory agency for voluntary sector, he said.
He ruled out government accreditation for VOs. He said that the government would encourage voluntary sector to develop alternative accreditation methodologies to facilitate funding and make the process more transparent.
The policy has proposed simplification of existing provisions of Foreign Exchange Contribution (Regulation) Act (FCRA). The government will review the FCRA and simplify its provisions that apply to voluntary organisations, from time to time, in consultation with the joint consultative group to be set up by the concerned ministry, it said.
Mr Ahluwalia said that the policy would act as a model for states and the Centre would encourage state governments to review their laws and rules in accordance with the National Policy.