e-VANI
…..Newsletter from VANI
                                                                                                    ( July – October 2009 )

Rounded Rectangle: Note from Harsh Jaitli, Chief Executive Officer, VANI Impact of Draft Direct Tax Code Bill 2009 on Charities and Voluntary Sector of India In its latest one sided experimentation with voluntary sector, the Finance Ministry came out with 'Direct Tax Code Bill', on August 12, 2009. The initial observation on these codes, applicable to all voluntary organizations of India, predicts a very gloomy future. On the one hand the government promises decent life to 'Aam Admi' (common people), and on the other, the country is going through a challenging phase due to financial recession and failure of crops, it is very unfortunate that those who are working hand in hand with government to serve the marginalized and the poor are being targeted. The preliminary listing of the changes proposed in the new Direct Taxes Code 2009 appears to lead to several adverse implications for the voluntary sector and may perhaps undermine its financial sustainability and survival in the long run. Being the independent voice of the sector, VANI, decided to put forward the concern in front of government, policy makers, media and public. The points given below are based on the input from renowned Tax consultants. 1. This code is applicable to all organizations operating as not-profit entities, which can range from foundations, NGOs, research and advocacy organizations, charity hospitals, etc. Unfortunately, this code puts large public (Ports, Religious, Public Schools, Corporate Hospitals) trusts and small organizations in one category. 2. NGOs will not be able to carry forward unspent income of one year to the next year, without paying a 15% tax on it. The same applies to multi-year grants - they will not be able to set aside or accumulate funds for long-term projects. Income and expenditure will have to be accounted on cash basis only. As per the proposed code all that funds will be taxed. This will not only substantially reduce the budget meant for poor but also put NGOs in crises that are already starving due to non-availability of bilateral funds for India. 3. The grant-making will become further complicated for most of the donor agencies of India. Now all that flexible grants provided by government or private agencies will be taxed. 4. Though surplus of one year will be taxed, it may be difficult for the NGOs to bring forward deficit of a past year, and set it off against the surplus. Thus, if we spend borrowed money for a project, we may end up paying tax when the grant is actually received next year. 5. The concept of 'Charitable Purpose' has been replaced by 'Permitted Welfare Activities'. This might reduce innovation and flexibility of approach, as the concept of 'permitted' is left undefined and vague. We fear that under this Code we have to argue, convince, and define our work to government officials every year. This will lead to not taking up innovative approaches to avoid taxation. 6. For the last few years many NGOs are involved in raising funds locally by either producing greeting cards which are also means to spread social development message, or charging nominal user fee to provide sustainability to the local initiatives. Our preliminary assessment makes us to believe that all this meager income which is generally used in projects will be taxed. Approval under 35AC (100% deductibility for donors) is being discontinued. NGOs will be able to offer a maximum of 50% deductibility to their donors. Considering the above VANI appealed to the Finance Minister and related departments for reconsidering certain hindering aspects of the ‘Direct Tax Code’. We do appreciate governments concern of rationalising the tax regime, but there is need to give differential treatment to large trusts with high transactions and NGOs involved in socio-economic development of poor of this country.
Folded Corner: Initiatives for the Direct tax Code campaign….. • A Consultation on Draft Direct Tax Code Bill 2009 and its Impact on Voluntary Sector was organised at India Islamic Centre, Delhi BY VANI on 3rd September 2009. • As an outcome, VANI appealed to all its members and non members across India to send appeals requesting the reconsideration of the Draft Direct tax code. Many of the organisations have sent these appeals directly to the Finance Minister. VANI itself received around 165 direct applications and the process is still on. • A Delegation from VANI met with Mr Pranab Mukherjee in a Participatory Interactive Session –on DTC on 9 October 2009 organised by CII, ASSOCHAM and FICCI. • Another delegation from VANI meet the Joint Secretary (TLP II) and Secretary (Revenue) to discuss the implications of DTC on the voluntary sector……….Initiatives are still on…. The initiatives are still ongoing……….

ANNOUNCEMENTS:-

Rounded Rectangle: • Media Matters is announcing a 10-day residential workshop from December 11 to 20, 2009 on “Communication Strategy for Behaviour & Social Change”, Please follow the link for more information and registration Rounded Rectangle: • Building Leadership for Disaster Risk Reduction: The training programme is being organized by XIMB in collaboration with Concern Worldwide from 23rd – 29th November, 09, at Bhubaneshwar, Orissa.Please follow the link for more information and registration
Rounded Rectangle: • HAP Training: Training programme on “Humanitarian Accountability’ is being conducted by Humanitarian Accountability Partnership (HAP) International, in collaboration with SEEDS India and Sphere India at New Delhi on 16th & 17th November 2009. Please follow the link for more information and registration
Rounded Rectangle: • Free subscription of Alliance Magazine : for information and debates on the current issues in the sector. The free electronic subscription will include: § four issues of Alliance magazine § eight issues of Alliance eBulletin § access to all Alliance past issues § For subscription please visit www.alliancemagazine.org Alliance magazine is published by the Alliance Publishing Trust (APT).Alliance Publishing Trust is a limited company registered in the UK.Registered office: 76 Sistova Rd, London SW12 9QS UK

Member of the Month  

Deccan Development Society
The Deccan Development Society (DDS), is a two-decade old grassroots organisation working in about 75 villages with women's Sanghams (voluntary village level associations of the poor) in Medak District of Andhra Pradesh. The 5000 women members of the Society represent the poorest of the poor in their village communities. Most of them are dalits, the lowest group in the Indian social hierarchy. The Society has a vision of consolidating these village groups into vibrant organs of primary local governance and federate them into a strong pressure lobby for women, the poor and dalits. A host of continuing dialogues, debates, educational and other activities with the people, facilitated by the Society, try to translate this vision into a reality.
For more details please visit  : www.ddsindia.com

 CONTACT PERSON:

                                  

Mr. P.V. Satheesh
Secretary
Deccan Development Society (DDS)
1-11-242/1, flat No. 101, Kishan Residency
Street No. 5, Shyamlal Building Area, Begumpet
Hyderabad - 500 016
Andhra Pradesh
Phone: 040-27764577, 27764744
Fax: 040-27764722,
Email: ddshyderabad@gmail.com

 
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