INDUSTRY BODIES TO RETAIN I-T BENEFITS

The Income Tax Department has come out with a circular that redefines the term" charitable purpose'. The circular, which was published on December 19, now says any entity that does business or trade in exchange for a fee or income cannot claim exemption from paying income tax. Many organizations avoid paying taxes by taking advantage of the definition under Section 2(15) of the Income Tax Act, which defined "the advancement of any other object of general public utility" as a "charitable purpose". As per the circular, industry associations' income from membership fee would not come under tax net. "Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and, in this respect, have no dealings or relations with any outside body, then any surplus returned to the
persons forming such associations is not chargeable to tax", the circular said. But there would have be complete categorization of contributors and participants.