NGOs Receive Shocks From Tax Notices

View quick summary Certain Non-Government Organisations (NGOs) have received notices from the Income Tax department. Several notices not only demand taxes to be paid but also press for revoking the NGOs’ registration under the I-T Act.
Helpage India, which renders assistance in setting up and running old-age homes, has received a scrutiny notice. Development Alternatives, an NGO that promotes sustainable development models, was punished with a notice demanding tax of Rs 5 crore. PRIYA, which encourages rural development through grassroots establishments, received a notice of Rs 42 lakh.
NGOs whose funds come from abroad are registered under the Foreign Contribution Regulation Act. Such NGOs started receiving tax notices since August after an Income Tax Law amendment in 2008.
The NGOs plan to chalk an action plan to address some anomalies in the Direct Taxes Code (DTC), which will come into effect from next year. The DTC requires that NGOs do not carry forward current year funds to the next year; else they are to pay 15% of the amount as tax.