Trustees will be liable in case of non-payment of exit tax: CBDT chief

CBDT chief says there's no reason to provide differential treatment for filing I-T returns

Trustees of charitable institutions will be made “personally liable”, if they don’t pay additional income tax (exit tax) on their accreted income, along with the trusts, Nitin Gupta, chairman of the Central Board of Direct Taxes (CBDT), told Business Standard.
 
In the Union Budget, presented on Wednesday, the government proposed a slew of amendments to some tax provisions governing charitable institutions, including expanding the scope of exit tax.
 
At present, charitable trusts are liable to pay 30 per cent exit tax (plus surcharge), if they convert into a non-charitable entity and transfer assets to any non-charitable entity.
 

The government has proposed that any delay in filing registration or re-registration for availing tax of exemption will trigger the exit tax provision. Besides, that exemption will go in case of delay in filing income tax return. “These amendments will further plug the loopholes and curb tax evasion by several trusts,” said Gupta.

 
Explaining the rationale, he said several trusts had siphoned off money after availing of all benefits under tax laws. They never filed tax returns and no payment of exit tax was made.
 
The purpose of the exit tax is to prevent companies from avoiding tax when relocating assets. The rules provide for an exit tax on unrealised capital gains. This might occur where companies, without making an actual disposal, migrate or transfer assets offshore.

 
Among other provisions, the Budget removed the option of filing revised income tax returns for trusts. If they file tax returns beyond the due date for original or belated tax returns, they will lose exemption.
 
Gupta said there was no need to give them differential treatment. “Why should there be a separate regime for charitable trusts? Why would they not comply with the law? They are not filing tax returns and are availing of exemption and deductions along with benefits under the I-T Act, which is a violation of the law,” Gupta said.
 
On meeting the Revised Estimates of direct taxes of Rs 16.5 trillion, Gupta said the current tally was Rs 12.31 trillion. So, about Rs 4.19 trillion has to be collected in the next two months. “We are hopeful of achieving it as both advance tax (last quarter dues) and TDS will come in the remaining months. For FY24, the Budget Estimate of direct taxes of Rs 18.23 trillion looks realistic and achievable,” he said.

 
On the “angel tax”, Gupta said apart from Department for Promotion of Industry and Internal Trade (DPIIT)-registered start-ups some venture capitalists too could be also given exemption. “In case of concerns, we will examine it further. We may come out with notification, if required,” he added.
 
On tightening TDS norms for the online gaming sector, he said the attempt was to remove ambiguity. “The industry has been confused on the TDS implication of 30 per cent and whether it will be deducted on the net winning. We will come with detailed guidelines on how it will be implemented. The rules would ease the compliance for the online gaming industry and also help tax administrators to monitor the sector,” Gupta added.

 
On setting up a joint commissioner (Appeals), he said both the Commissioner of Income Tax (Appeals) and JC (appeals) will work in parallel. And the case would then go directly to the income tax appellate tribunal. The move aims to reduce pendency in direct taxes matters.