Voluntary Sector and Tax Policies in India

Dr G.T. Govindappa, Kuempu University

Tax policies are one of the important areas through which government can have control over and influence the activities of third sector organisations. In this background the study undertaken by Dr G. T. Govindappa assumes importance. The objectives of this study are to analyse the taxation provisions relating to voluntary organisations and examine the tax incentives to charitable donations. It also attempts to study the trends in the tax provisions from the point of policy changes, from 1922 to 2002.

With the above objectives, the study report begins with an introduction by identifying the problem, fixing the scope and demonstrating the relevance of the study. It then moves on to give a brief outline of Income-tax structure in India and  helps understand better tax treatment given to voluntary organisations.  The report analyses the concept of “charitable purpose” as given under income tax law and how it has changed over a period of time. In its core chapter the report concentrates on the details of tax incentives given to voluntary organisations and charitable donations under different tax legislations. A small empirical study, conducted in Davanagere city of Karnataka State, is also included to substantiate the theoretical position taken in the study.  The report concludes with findings and policy suggestions. It also sets out areas of further research that can be under taken in this field. The study covers both the direct and indirect tax laws as applicable to voluntary organisations.