Minorities will oppose such a law A uniform law applicable to charities across the country is indeed a laudable objective. However, it is likely to run into rough weather and may never see the light of day. Regulation of charity, or the lack of it, varies from state to state. Even large and bona fide charities often prefer to operate from a state where there is no law regulating charity (West Bengal and Tamil Nadu) due to the fear of being embroiled in mindless overregulation as also vexatious and frivolous litigation. Maharashtra and Gujarat have the strongest tradition of law relating to charities in the form of the Bombay Public Trusts Act, 1950. However, levels of efficiency and integrity are not very high in case of charity regulators, to say the least. In addition, most large trusts are constantly involved in litigation either before the Charity Commissioner or the courts, directly affecting their smooth functioning. A national law will make for better regulation on the lines of the company law administration. However, itwill be severely opposed by minorities, including Muslims and Indian Christians, to the extent that it seeks to replace the existing laws which apply to a particular minority. In addition, legislations like the proposed uniform law on charities are likely to gather dust in the form of a draft bill as they are unlikely to get legislative priority. While undoubtedly bona fide charities are on the increase in India as philanthropy management becomes more serious, it is equally true that several unscrupulous elements float charity trusts only to evade taxes by abusing the generous exemptions under the income tax law given to charities. A national law will make it difficult for such elements to operate with impunity. Over a period of time, a national charity directorate is highly desirable and required. Even in the developed countries, regulation of charity is a slow process. Only late last year, New York becomes the 47th state in the US to adopt a new uniform law for managing, investing and spending of charitable endowments. Let’s hope that the new law will be simple and rational and encourage philanthropy management in India, rather than be a deterrent to it. Berjis Desai
Managing Partner, J Sagar Associates
There is no case to exempt them Charitable and religious institutions in India are governed by a plethora of laws. To be recognised as an organisation established for religious or a charitable purpose, the entity has to first register itself at a state level under either the Trusts Act, Societies Registration Act or under section 25 the Companies Act. Thereafter, to seek tax exemption, it has to register under section 12Aa of the Central Income Tax Act. If it receives funds from foreign sources, the organisation has to register with the Home Ministry under FCRA. It is still not clear whether the new model law will provide a single-window registration and eliminate the need for organisations to register and then report to various departments such as the charity commissioner, income tax and the home ministry. There is a lot of dichotomy between state and central legislations. For instance, section 11(5) of the Income tax Act allows charitable or religious trusts to invest their funds in a mutual fund. However, at the state level, the charity commissioner under Bombay Public Trusts Act 1950 allows investments only in certain MFs. A Section 25-company registered with the Registrar of Companies may easily borrow funds or alienate property, but a trust or society registered in Maharashtra or Gujarat cannot do so without prior permission of the charity commissioner. Indeed, a uniform law could eliminate this dichotomy and streamline processing and reporting systems. Often, the government tries not to annoy religious bodies. When it introduced section 115 BBC a few years ago to tax anonymous donations, it targeted only ‘charitable’ and not ‘religious’ institutions. Also, ‘charitable’ trusts established after 1961 for specific religious communities or denominations do not enjoy tax benefits. But, a trust wholly for ‘religious purpose’ could! In my opinion, whether the institution is ‘religious’ or ‘charitable’, legislation should be such that it ‘regulates’ rather than ‘controls’ and regulation should be such that it promotes maximum transparency and accountability. Merely because an institution is religious does not give it a right to be exempt from regulation. In this regard, legislation should be equitable for both religious and charitable institutions. Noshir H Dadrawala
CEO, Centre for Advancement of Philanthropy
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