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LATEST NEWS UPDATES | Government plans 'umbrella law' to tighten scrutiny and regulation of religious trusts and NGOs </title>
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<h1 class="cat-box-title">Government plans 'umbrella law' to tighten scrutiny and regulation of religious trusts and NGOs</h1>
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Published on</span><span class="text-date"> May 2, 2011</span>
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<div align="justify">The government plans an umbrella law to tighten financial scrutiny and regulation of religious trusts and non-profit organisations as it looks to allay global concerns about money laundering and terrorist financing activities by such entities. It is also likely to make public names of organisations that claim tax exemption to ensure greater transparency. Some of India's religious trusts are among the richest in the world. Last year, Tirumala temple, managed by Tirumala Tirupati Devasthanams, collected about 575 crore in cash alone.<br /><br />Although most trusts that manage big temples have now been taken over by their state governments, authorities are concerned about the smaller ones that are run privately. "The law is under examination ," a finance ministry official told ET. An inter-ministerial panel has drawn up the contours of the law that has proposed a centralised authority to deal with the non-profit sector, a practice followed in the US, Bangladesh and Nepal.<br /><br />At present, India has different laws administering such bodies : the Indian Trusts Act, Bombay Trusts Act, Foreign Contribution Regulation Act, Societies Act, trusts Acts in various states and the Companies Act. Multiple Acts make monitoring of these entities difficult , raising concerns on the source and outflow of funds. "There is a need for a national framework legislation which will help create an ecosystem to support the NPO sector. This will bring transparency and accountability through promoting public disclosure and enhance financial reporting within the voluntary sector," said Parul Soni of Ernst &amp; Young Pvt Ltd.<br /><br /><strong><em>Matter of Trust<br /></em></strong><br /><em>A nonprofit organisation can be set up as a...<br /></em><br />Trust under the state trusts Acts such as Bombay Trusts Act, Indian Trusts Act Society under the Societies Registration Act Section 25 company under the Companies Act, 1956<br /><br /><em>They need to register with...<br /></em><br />The Income-Tax Department for income-tax exemption Home ministry under the Foreign Contributions Regulations Act, and the states to comply with various state laws A foreign NPO setting up an office in India & wanting staff from abroad will need permission from the RBI & also an NOC from External Affairs Ministry Managements of some of the temple trusts such as Vaishno Devi and Tirupati have been taken over by state governments<br /><br /><br /><em>Key Issues<br /></em><br />No centralised body to keep a tab on the sector Too many of them - I-T Dept puts total number of charitable organisations at 1 lakh but unofficial number is double that They command a lot of funds about which very little is known.<br /><br /><em>Finance Ministry to Consult States<br /></em><br />The finance ministry has initiated discussions on the single-law proposal and will consult state governments as some areas relating to NPOs fall under the state and concurrent lists of the Constitution . "The final contours of the framework would emerge after discussions with all stakeholders and state governments ," the official said. However, the government is expected to complete the process by March 2012, he said. "Unregulated NPOs are known to act as conduits for money laundering for organized crime," an anti-money laundering expert working with a multilateral institution said, requesting anonymity. Global pressure is also growing on India to act urgently.<br /><br />The Financial Action Task Force , or FATF, has in its latest report identified fund transfers from foreign NPOs as one of the major sources for terrorist financing in the country, on a par with counterfeiting of currency, drug trafficking and extortion. FATF is a global watchdog to monitor illicit flows and terror financing. "India does not maintain a unified database for NPOs... Statistics on the registered NPOs are not generally available in India," the report said. The only credible source of information is the income-tax department because it gives tax exemption to the NPOs. There are about a lakh such entities registered with the department but unofficial estimates put the number at about 2 lakh. Nonprofit organisations include corporate charities and educational institutions.<br /><br />The Central Board of Direct Taxes is planning to strengthen monitoring before granting exemptions to NPOs, often accused of misusing tax breaks. The government is estimated to have lost . 854 crore in tax revenues in 2010-11 on account of donations to charitable trusts and institutions. The government has tightened income-tax provisions in the current law and is proposing a more stringent framework under the proposed Direct Taxes Code.<br /><br />Experts suggest stricter tabs on donors and a greater coordination between the Centre and states to deal with money laundering. "KYC procedures and a central repository of donors are key controls to be looked into. Both Centre and states should work together to combat this threat which could emerge from even a single NPO which may be insignificant in size and operations but has enough infrastructure to mushroom," the expert said.<br /><br /></div>
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<br><a href="http://economictimes.indiatimes.com/news/economy/policy/government-plans-umbrella-law-to-tighten-scrutiny-and-regulation-of-religious-trusts-and-ngos/articleshow/81408" class="re" target="_blank">The Economic Times, 2 May, 2011, http://economictimes.indiatimes.com/news/economy/policy/government-plans-umbrella-law-to-tighten-scrutiny-and-regulation-of-religious-trusts-and-ngos/articleshow/81408</a><div class="clear"></div>
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<h1 class="cat-box-title">Government plans 'umbrella law' to tighten scrutiny and regulation of religious trusts and NGOs</h1>
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Published on</span><span class="text-date"> May 2, 2011</span>
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<div align="justify">The government plans an umbrella law to tighten financial scrutiny and regulation of religious trusts and non-profit organisations as it looks to allay global concerns about money laundering and terrorist financing activities by such entities. It is also likely to make public names of organisations that claim tax exemption to ensure greater transparency. Some of India's religious trusts are among the richest in the world. Last year, Tirumala temple, managed by Tirumala Tirupati Devasthanams, collected about 575 crore in cash alone.<br /><br />Although most trusts that manage big temples have now been taken over by their state governments, authorities are concerned about the smaller ones that are run privately. "The law is under examination ," a finance ministry official told ET. An inter-ministerial panel has drawn up the contours of the law that has proposed a centralised authority to deal with the non-profit sector, a practice followed in the US, Bangladesh and Nepal.<br /><br />At present, India has different laws administering such bodies : the Indian Trusts Act, Bombay Trusts Act, Foreign Contribution Regulation Act, Societies Act, trusts Acts in various states and the Companies Act. Multiple Acts make monitoring of these entities difficult , raising concerns on the source and outflow of funds. "There is a need for a national framework legislation which will help create an ecosystem to support the NPO sector. This will bring transparency and accountability through promoting public disclosure and enhance financial reporting within the voluntary sector," said Parul Soni of Ernst &amp; Young Pvt Ltd.<br /><br /><strong><em>Matter of Trust<br /></em></strong><br /><em>A nonprofit organisation can be set up as a...<br /></em><br />Trust under the state trusts Acts such as Bombay Trusts Act, Indian Trusts Act Society under the Societies Registration Act Section 25 company under the Companies Act, 1956<br /><br /><em>They need to register with...<br /></em><br />The Income-Tax Department for income-tax exemption Home ministry under the Foreign Contributions Regulations Act, and the states to comply with various state laws A foreign NPO setting up an office in India & wanting staff from abroad will need permission from the RBI & also an NOC from External Affairs Ministry Managements of some of the temple trusts such as Vaishno Devi and Tirupati have been taken over by state governments<br /><br /><br /><em>Key Issues<br /></em><br />No centralised body to keep a tab on the sector Too many of them - I-T Dept puts total number of charitable organisations at 1 lakh but unofficial number is double that They command a lot of funds about which very little is known.<br /><br /><em>Finance Ministry to Consult States<br /></em><br />The finance ministry has initiated discussions on the single-law proposal and will consult state governments as some areas relating to NPOs fall under the state and concurrent lists of the Constitution . "The final contours of the framework would emerge after discussions with all stakeholders and state governments ," the official said. However, the government is expected to complete the process by March 2012, he said. "Unregulated NPOs are known to act as conduits for money laundering for organized crime," an anti-money laundering expert working with a multilateral institution said, requesting anonymity. Global pressure is also growing on India to act urgently.<br /><br />The Financial Action Task Force , or FATF, has in its latest report identified fund transfers from foreign NPOs as one of the major sources for terrorist financing in the country, on a par with counterfeiting of currency, drug trafficking and extortion. FATF is a global watchdog to monitor illicit flows and terror financing. "India does not maintain a unified database for NPOs... Statistics on the registered NPOs are not generally available in India," the report said. The only credible source of information is the income-tax department because it gives tax exemption to the NPOs. There are about a lakh such entities registered with the department but unofficial estimates put the number at about 2 lakh. Nonprofit organisations include corporate charities and educational institutions.<br /><br />The Central Board of Direct Taxes is planning to strengthen monitoring before granting exemptions to NPOs, often accused of misusing tax breaks. The government is estimated to have lost . 854 crore in tax revenues in 2010-11 on account of donations to charitable trusts and institutions. The government has tightened income-tax provisions in the current law and is proposing a more stringent framework under the proposed Direct Taxes Code.<br /><br />Experts suggest stricter tabs on donors and a greater coordination between the Centre and states to deal with money laundering. "KYC procedures and a central repository of donors are key controls to be looked into. Both Centre and states should work together to combat this threat which could emerge from even a single NPO which may be insignificant in size and operations but has enough infrastructure to mushroom," the expert said.<br /><br /></div>
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<br><a href="http://economictimes.indiatimes.com/news/economy/policy/government-plans-umbrella-law-to-tighten-scrutiny-and-regulation-of-religious-trusts-and-ngos/articleshow/81408" class="re" target="_blank">The Economic Times, 2 May, 2011, http://economictimes.indiatimes.com/news/economy/policy/government-plans-umbrella-law-to-tighten-scrutiny-and-regulation-of-religious-trusts-and-ngos/articleshow/81408</a><div class="clear"></div>
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<h1 class="cat-box-title">Government plans 'umbrella law' to tighten scrutiny and regulation of religious trusts and NGOs</h1>
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Published on</span><span class="text-date"> May 2, 2011</span>
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<div align="justify">The government plans an umbrella law to tighten financial scrutiny and regulation of religious trusts and non-profit organisations as it looks to allay global concerns about money laundering and terrorist financing activities by such entities. It is also likely to make public names of organisations that claim tax exemption to ensure greater transparency. Some of India's religious trusts are among the richest in the world. Last year, Tirumala temple, managed by Tirumala Tirupati Devasthanams, collected about 575 crore in cash alone.<br /><br />Although most trusts that manage big temples have now been taken over by their state governments, authorities are concerned about the smaller ones that are run privately. "The law is under examination ," a finance ministry official told ET. An inter-ministerial panel has drawn up the contours of the law that has proposed a centralised authority to deal with the non-profit sector, a practice followed in the US, Bangladesh and Nepal.<br /><br />At present, India has different laws administering such bodies : the Indian Trusts Act, Bombay Trusts Act, Foreign Contribution Regulation Act, Societies Act, trusts Acts in various states and the Companies Act. Multiple Acts make monitoring of these entities difficult , raising concerns on the source and outflow of funds. "There is a need for a national framework legislation which will help create an ecosystem to support the NPO sector. This will bring transparency and accountability through promoting public disclosure and enhance financial reporting within the voluntary sector," said Parul Soni of Ernst &amp; Young Pvt Ltd.<br /><br /><strong><em>Matter of Trust<br /></em></strong><br /><em>A nonprofit organisation can be set up as a...<br /></em><br />Trust under the state trusts Acts such as Bombay Trusts Act, Indian Trusts Act Society under the Societies Registration Act Section 25 company under the Companies Act, 1956<br /><br /><em>They need to register with...<br /></em><br />The Income-Tax Department for income-tax exemption Home ministry under the Foreign Contributions Regulations Act, and the states to comply with various state laws A foreign NPO setting up an office in India & wanting staff from abroad will need permission from the RBI & also an NOC from External Affairs Ministry Managements of some of the temple trusts such as Vaishno Devi and Tirupati have been taken over by state governments<br /><br /><br /><em>Key Issues<br /></em><br />No centralised body to keep a tab on the sector Too many of them - I-T Dept puts total number of charitable organisations at 1 lakh but unofficial number is double that They command a lot of funds about which very little is known.<br /><br /><em>Finance Ministry to Consult States<br /></em><br />The finance ministry has initiated discussions on the single-law proposal and will consult state governments as some areas relating to NPOs fall under the state and concurrent lists of the Constitution . "The final contours of the framework would emerge after discussions with all stakeholders and state governments ," the official said. However, the government is expected to complete the process by March 2012, he said. "Unregulated NPOs are known to act as conduits for money laundering for organized crime," an anti-money laundering expert working with a multilateral institution said, requesting anonymity. Global pressure is also growing on India to act urgently.<br /><br />The Financial Action Task Force , or FATF, has in its latest report identified fund transfers from foreign NPOs as one of the major sources for terrorist financing in the country, on a par with counterfeiting of currency, drug trafficking and extortion. FATF is a global watchdog to monitor illicit flows and terror financing. "India does not maintain a unified database for NPOs... Statistics on the registered NPOs are not generally available in India," the report said. The only credible source of information is the income-tax department because it gives tax exemption to the NPOs. There are about a lakh such entities registered with the department but unofficial estimates put the number at about 2 lakh. Nonprofit organisations include corporate charities and educational institutions.<br /><br />The Central Board of Direct Taxes is planning to strengthen monitoring before granting exemptions to NPOs, often accused of misusing tax breaks. The government is estimated to have lost . 854 crore in tax revenues in 2010-11 on account of donations to charitable trusts and institutions. The government has tightened income-tax provisions in the current law and is proposing a more stringent framework under the proposed Direct Taxes Code.<br /><br />Experts suggest stricter tabs on donors and a greater coordination between the Centre and states to deal with money laundering. "KYC procedures and a central repository of donors are key controls to be looked into. Both Centre and states should work together to combat this threat which could emerge from even a single NPO which may be insignificant in size and operations but has enough infrastructure to mushroom," the expert said.<br /><br /></div>
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<br><a href="http://economictimes.indiatimes.com/news/economy/policy/government-plans-umbrella-law-to-tighten-scrutiny-and-regulation-of-religious-trusts-and-ngos/articleshow/81408" class="re" target="_blank">The Economic Times, 2 May, 2011, http://economictimes.indiatimes.com/news/economy/policy/government-plans-umbrella-law-to-tighten-scrutiny-and-regulation-of-religious-trusts-and-ngos/articleshow/81408</a><div class="clear"></div>
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LATEST NEWS UPDATES | Government plans 'umbrella law' to tighten scrutiny and regulation of religious trusts and NGOs
Government plans 'umbrella law' to tighten scrutiny and regulation of religious trusts and NGOs
Published on May 2, 2011
Modified on May 2, 2011
The government plans an umbrella law to tighten financial scrutiny and regulation of religious trusts and non-profit organisations as it looks to allay global concerns about money laundering and terrorist financing activities by such entities. It is also likely to make public names of organisations that claim tax exemption to ensure greater transparency. Some of India's religious trusts are among the richest in the world. Last year, Tirumala temple, managed by Tirumala Tirupati Devasthanams, collected about 575 crore in cash alone.
Although most trusts that manage big temples have now been taken over by their state governments, authorities are concerned about the smaller ones that are run privately. "The law is under examination ," a finance ministry official told ET. An inter-ministerial panel has drawn up the contours of the law that has proposed a centralised authority to deal with the non-profit sector, a practice followed in the US, Bangladesh and Nepal.
At present, India has different laws administering such bodies : the Indian Trusts Act, Bombay Trusts Act, Foreign Contribution Regulation Act, Societies Act, trusts Acts in various states and the Companies Act. Multiple Acts make monitoring of these entities difficult , raising concerns on the source and outflow of funds. "There is a need for a national framework legislation which will help create an ecosystem to support the NPO sector. This will bring transparency and accountability through promoting public disclosure and enhance financial reporting within the voluntary sector," said Parul Soni of Ernst & Young Pvt Ltd.
Matter of Trust
A nonprofit organisation can be set up as a...
Trust under the state trusts Acts such as Bombay Trusts Act, Indian Trusts Act Society under the Societies Registration Act Section 25 company under the Companies Act, 1956
They need to register with...
The Income-Tax Department for income-tax exemption Home ministry under the Foreign Contributions Regulations Act, and the states to comply with various state laws A foreign NPO setting up an office in India & wanting staff from abroad will need permission from the RBI & also an NOC from External Affairs Ministry Managements of some of the temple trusts such as Vaishno Devi and Tirupati have been taken over by state governments
Key Issues
No centralised body to keep a tab on the sector Too many of them - I-T Dept puts total number of charitable organisations at 1 lakh but unofficial number is double that They command a lot of funds about which very little is known.
Finance Ministry to Consult States
The finance ministry has initiated discussions on the single-law proposal and will consult state governments as some areas relating to NPOs fall under the state and concurrent lists of the Constitution . "The final contours of the framework would emerge after discussions with all stakeholders and state governments ," the official said. However, the government is expected to complete the process by March 2012, he said. "Unregulated NPOs are known to act as conduits for money laundering for organized crime," an anti-money laundering expert working with a multilateral institution said, requesting anonymity. Global pressure is also growing on India to act urgently.
The Financial Action Task Force , or FATF, has in its latest report identified fund transfers from foreign NPOs as one of the major sources for terrorist financing in the country, on a par with counterfeiting of currency, drug trafficking and extortion. FATF is a global watchdog to monitor illicit flows and terror financing. "India does not maintain a unified database for NPOs... Statistics on the registered NPOs are not generally available in India," the report said. The only credible source of information is the income-tax department because it gives tax exemption to the NPOs. There are about a lakh such entities registered with the department but unofficial estimates put the number at about 2 lakh. Nonprofit organisations include corporate charities and educational institutions.
The Central Board of Direct Taxes is planning to strengthen monitoring before granting exemptions to NPOs, often accused of misusing tax breaks. The government is estimated to have lost . 854 crore in tax revenues in 2010-11 on account of donations to charitable trusts and institutions. The government has tightened income-tax provisions in the current law and is proposing a more stringent framework under the proposed Direct Taxes Code.
Experts suggest stricter tabs on donors and a greater coordination between the Centre and states to deal with money laundering. "KYC procedures and a central repository of donors are key controls to be looked into. Both Centre and states should work together to combat this threat which could emerge from even a single NPO which may be insignificant in size and operations but has enough infrastructure to mushroom," the expert said.
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