Parl panel for tax exemptions on donations to religious trusts

A Parliamentary panel examining the new Income Tax Bill on Monday recommended exempting anonymous donations made to religious-cum-charitable trusts from taxation. It also suggested that the Finance Ministry permit individual taxpayers to claim tax refunds by filing I-T returns after the due date without penalty.

The Select Committee of the Lok Sabha, headed by BJP MP Baijayant Panda, scrutinised the Income Tax Bill, 2025, and submitted a 4,584-page report on the proposed legislation in the Lower House.

Meanwhile, two Opposition MPs — Congress’ Amar Singh from Fatehgarh Sahib and RSP’s NK Premachandran from Kerala’s Kollam — raised concerns over clauses in the Bill granting tax officials overriding powers to access digital platforms of assessees during investigations. They termed these provisions an infringement of the constitutional right to privacy and submitted dissent notes against the Select Committee’s report.

The committee recommended amendments to the Bill which seeks to replace the six-decade-old Income Tax Act, 1961. It suggested removing ambiguity regarding the taxation of anonymous donations for non-profit organisations (NPOs), particularly those with mixed charitable and religious objectives.

Opposing the taxation of NPOs’ “receipts” as contrary to the principle of real income taxation, the panel recommended reintroducing the term “income” to ensure only net income of NPOs is taxed. Observing a “significant divergence in the treatment of anonymous donations,” the committee proposed exemptions for such donations to religious and charitable trusts, given their hybrid nature.