Catholic Church concerned of clauses in Direct Tax Code

The Catholic Church has expressed concern over certain provisions in the Direct Tax Code (DTC) which it says will pose "serious difficulties" to religious and charitable institutions.

"The Direct Tax Code as conceived creates serious difficulties for societies, trusts and institutions functioning under Catholic community and other religions," said the Catholic Bishops Conference of India (CBCI) in a memorandum to Finance Minister Pranab Mukherjee.

According to CBCI spokesperson Babu Joseph, the direct tax bill seems to overlook the possible dangers and harm that can be caused to genuine charitable institutions across the country.

"What is desirable is to weed out those institutions and organisations that indulge in financial frauds and swindling of resources at the cost of the deserving people for whom such organisations exist," suggests Joseph.

In the memorandum, the finance minister was apprised that "churches, convents, monasteries, dioceses, congregations, ashrams etc are established and working according to the Canon Law that is internationally recognized."

Though several religious institutions are registered under Indian Trust Act or 12 A of the IT ACT 1961, they "do not come under any central or state enactments (except under section 12A of the IT Act)," it pointed.

The DTC once finalised, would replace the existing income-tax law in India with effect from April 1, 2011. The DTC proposes a number of significant changes to the tax laws.