Criticising the Union Budget 2023-24 presented by Finance Minister Nirmala Sitharaman on Wednesday, Viren Merchant, Chartered Accountant and Auditor to various charitable, religious and educational bodies has said that the new tax regime will further burden religious and charitable organizations with tax compliance and cut the wings of public charity.
“ Year after year increasing tax compliances are levied and that is burdening the sector. Most of the organizations are simple and cannot deal with such complex tax provisions, ” Merchant said.
He further added that, “Trustees are not qualified CAs. They are doing honorary work and the new tax regime is not reasonable for them. The government should have introduced some provisions to exempt small charitable trusts like how small businesses have presumptive taxation.”
Merchant said that the provisions are good for keeping a check on organizations indulging in accommodating entries, but bad for small ones. “If compliance is not done then registration of the trust is canceled. Once that happens, you have to pay 30 percent tax on the asset value even if there is no earning.”
As per the Union Budget 2023-24, religious and charitable trusts are now required to apply 85% of their income within the year to avail income tax exemption. From April 2023, if a charitable trust donates to another charitable trust, only 85% of such a donation would be considered as application of income.
