The Hindu Business Line : RK Mission seeks ICAI help for FBT exemption

THE Ramakrishna Mission has urged the Institute of Chartered Accountants of India (ICAI) to take up its case with regard to fringe benefit tax (FBT). The institute is taking a favourable view on the matter.

The mission which has already written to the Government expressing its opinion on several aspects of the Budgetary proposal on FBT, recently made representations before the top office-bearers of ICAI.

According to Mr Kamlesh S. Vikamsey, President of ICAI, the institute will side with the mission on the issue. "We have considered it sympathetically," he said, adding that charitable bodies do have a case.

What is said to strengthen the argument is the current I-T law: revenue earnings of a charitable organisation are subject to tax when it fails to utilise 85 per cent of its income within a period of five years. However, FBT is a compulsory levy.

All charitable outfits are required to pay FBT on the 17 benefits listed in the Budget; expenses incurred on travelling, telephone, maintenance of vehicles are quite essential for the welfare activities carried on by them, it is pointed out.

Insiders also referred to the relief operations mounted by a number of charities after natural disasters - these too require heavy expenditure on travelling.

The mission, it may be mentioned, has called for the Government's intervention in the matter.

In fact, Swami Smaranananda, General Secretary, has urged the authorities to insert a provision exempting tax-exempt charitable institutions from the purview of FBT.

"Alternatively, as in the case of total income-tax exemption, a separate exemption notification order may be issued in respect of FBT to bona fide charitable institutions that are enjoying total income-tax exemption," said a note from him.

The note also referred to a few fundamental traits of such outfits, especially those relating to services rendered voluntarily.

"Most of the charitable organisations cannot afford to pay even reasonable salary to their staff. Rather, they depend to a great extent on the services rendered by volunteers and well-wishers," it said, adding that few staffers have taxable income.

"There is, therefore, no need to reduce their taxable income in the form of travelling expenses and phone bills."

Mission unveils numbers

Based on figures for 2003-04, the FBT liability for the Mission would be around Rs 85 lakh.

Both the mission and the Ramakrishna Math are exempt from I-T under Section 10 (23C)(iv) of the I-T Act. In 2005-06, the figure would be around Rs 1 crore.

There would be a large erosion of funds every year, which would affect its service activities, the Mission said.

Its note has, incidentally, referred to its tsunami relief operation undertaken at Port Blair, where transportation of goods had entailed heavy expenditure.

Further, the mission has submitted that it runs schools in rural and remote tribal areas.

At Cherrapunjee in Meghalaya, for instance, thousands of children study at schools set up by it.

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