Income Tax Law

In August 2009 the finance ministry released the draft Direct Taxes Code (DTC) with the objective of simplifying and rationalising the direct taxation regime in India. Although the proposed code simplifies taxation for corporates and individual tax payers, it reverses this where the voluntary sector is concerned. Since 2009 VANI has been advocating with the ministry to make the DTC friendly for the voluntary sector. As a result of the first stage of the campaign, which was undertaken with your support, many changes can be seen in the revised discussion paper which was released on 15 June 2010. VANI framed and articulated the concerns and suggestions of the voluntary sector. VANI mobilised not only its members but all voluntary organisations working in the development sector to send their appeals to the finance ministry and other policy makers. A number of representations and delegations were organised by VANI with the Ministry of Finance and the Standing Committee of Parliament on Finance. VANI was able to include the definition of ‘charitable purpose' in the DTC draft, a provision to carry forward 15 per cent of surplus to the next year, and relaxation if funds are released in the month of March. But there are many areas still to be addressed such as demand for having choice of accrual and cash accounting systems, taxing of grants, carrying forward the surplus as well as changing the language of business activities.

An additional achievement of the process has been that the finance minister has started meeting delegations from the voluntary sector before preparing the annual budget of the country. Traditionally, the minister only met representatives from industry, trade unions and political parties during pre-budget consultations. VANI raised the demand for similar consultations with the voluntary sector.