The Hindu : National : PAC points to tax evasion by schools, colleges

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Friday, Aug 05, 2005

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National

PAC points to tax evasion by schools, colleges

Special Correspondent

Institutions must fulfil exemption obligations

NEW DELHI: The Public Accounts Committee has asked the Finance Ministry to prepare a "reliable" database of private educational institutions, and schools, colleges and coaching centres run by charitable trusts within four weeks in the wake of tax evasion by many such organisations running into crores of rupees.

In its report tabled in the Lok Sabha on Wednesday, the PAC said: "The Committee has observed that there is no systematic and organised approach in the department to ensure that all private educational institutions which are required to fulfil certain obligations under the Income-Tax Act to claim the exemption are, in fact, doing so before claiming the tax benefit."

The committee has noted that apart from earning income from educational activities, several private institutions mop up funds by asking for donations and contributions from their wards in the name of building fund, swimming pool charges, calamity fund, etc. Also, "there is no dearth of cases where big amounts as donations are taken before allowing admission of children in various schools," the report said.

The PAC, the report said, is of the view that these funds should form part of the income of such institutions and be taxed.

Briefing newspersons after tabling the report, PAC Chairman V.K. Malhotra said there were fears that some corporatescould be running educational institutions and converting black money into white by claiming tax exemption under the category of "educational charitable institutions." The Income Tax authorities should look into the matter, he said.

Scrutiny by the committee, the report said, has revealed that the IT department has so far not been able to widen the tax base by identifying these private educational institutions, run by trusts or others, which earn huge sums of money by functioning "in a not so charitable manner."

"The committee has noted that the bulk of assessments of private schools, colleges and charitable trusts are by and large completed in a summary manner, which is not desirable," it said.

IT refund

On PAC's report on IT refund, which was also tabled in the House, Mr. Malhotra demanded expeditious pay back while expressing concern over corruption in some refund cases.

In this regard, the committee has suggested the setting up of a body to look into the staff shortage problem of the IT Department and the consequent heavy workload and slow movement of assessment files so as to facilitate steps for remedial action.

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