Proposed New Grounds for Cancelling Tax-Exempt Status of Nonprofits in India

15 July, 2019

The Indian government's proposed 2019 budget would amend the Income Tax Act of 1961 by adding grounds on which the tax-exempt status of a nonprofit can be cancelled. In particular, under the proposed bill a nonprofit could lose its tax-exempt status at the discretion of the Tax Principal Commissioner or Commissioner if the nonprofit has violated any law material to achieving its objectives. This proposal threatens the independence of the nonprofit sector as it gives the government wide discretion to cancel the tax-exempt status of a nonprofit for even minor violations of the law. See Account Aid and the Centre for Advancement for Philanthropy for detailed write ups on this proposed change.