The government has decided to treat private educational institutions on par with commercial establishments, and impose tax on them. Presently, most private educational institutions are registered as charitable trusts and run on not-for-profit model.
Hindustan Times accessed the government data, which shows that there has been a 204% increase in income tax raids in the first quarter of this financial year from 41 in April-June last year to 125 this year. The increases have also led to a 140% increase in cash and jewellery seizures. The biggest haul was from a private medical college in Chennai.
“Most private institutions charge huge capitation fees during admissions and there are no records for these payments. So obviously, they are not paying tax on it,” said a senior tax official.
All facts have been put in front of the government by the tax department. “All educational institutions running on commercial lines should be taxed,” said the officer quoted earlier.
Under section 12A of the I-T Act, a taxman can cancel registrations of trusts if they breach the principles of ‘charitable purpose of trusts’.