Overview of Charitable Institutions in India

Socio-economic progress in India depends heavily on charitable institutions that have existed in the nation for a long period. There exists a wide range of charitable organizations in India that work across education, health services, poverty reduction and community building programs even though government welfare initiatives might leave some gaps unresolved.

Various Indian laws regulate charitable organizations which exist as both non-governmental organizations (NGOs) and trusts and societies under the Societies Registration Act 1860 and Indian Trusts Act 1882 and Section 8 under the Companies Act 2013. These entities obtain funding from donations as well as grants and endowments which they use to execute their missions because they provide additional support to state welfare programs and social justice initiatives.

Indian charitable institutions make an important impact on society because of the wide economic differences across the nation. Statistics show India surpasses 3 million NGOs and every 400 citizens in the population represents an NGO. These community institutions perform three major roles in serving marginalized populations while defending human rights across India and fostering national development with their programs.

The Indian government supports charitable institution development by providing them tax exemptions to encourage philanthropic activities and welfare donations. Recent reports indicate that certain charitable institutions exploit their privileges by conducting unethical financial activities which includes tax evasion and money laundering and financial misconduct.

Tax exemptions exist under the provisions of Income Tax Act 1961

The Indian Income Tax Act of 1961 extends substantial tax breaks to charitable establishments through Sections 11, 12 and 13. Under the Income Tax Act of 1961 charitable organizations together with organizations conducting religious activities receive exemptions for their charitable income. 

The key provisions include:

• Section 11 of the Income Tax Act 1961: Institutions can claim tax exemptions when their charitable trust property generates income which must reach 85% of total income as per definitions set for charitable objectives. The institution can only accumulate funds when the money serves a certain objective with five years being its maximum utilization period.
• Section 12: The tax exemption extends to charitable organizations when members voluntarily donate money which supports charitable needs.
• Section 13: Organizations lose their tax exemption when their earnings provide personal advantages to individuals or special groups.
• Section 115BBC: Legislated for money laundering purposes, it requires taxation on undisclosed donations which surpass mandatory levels. The Indian tax authority applies a 30% rate on such donations because unverified cash donations are unwanted.

These provisions create both conditions to promote philanthropic activities and mandates to maintain organization alignment with their stated purposes. Some organizations use the availability of regulatory benefits to take advantage for their own financial purposes or to benefit individual groups or people. Rising Concerns Over Tax Evasion Despite the legal provisions aimed at ensuring transparency and compliance, tax evasion within charitable institutions has become a significant concern. Several cases have revealed that some organizations engage in financial misconduct, including:

• Diversion of funds: Many trusts and NGOs have been found to funnel funds into unrelated activities or private entities, violating their tax-exempt status.
• Fake donations and receipts: Some entities issue fraudulent donation receipts to donors who claim deductions under Section 80G while the funds are never utilized for charitable purposes.
• Overstated expenses: By inflating administrative and operational costs, institutions reduce taxable income and avoid paying taxes.
• Anonymous cash transactions: Large sums of unaccounted donations are received in cash, which may be used for money laundering or tax avoidance.

The Central Board of Direct Taxes (CBDT) and the Income Tax Department have identified several instances of tax evasion by charitable institutions. In 2019, tax authorities sent notices to over 8,000 taxpayers who had donated significant amounts to charitable trusts suspected of facilitating tax evasion. This heightened scrutiny reflects the government's intent to curb financial wrongdoing and restore public trust in the sector. The objective of the study This research investigates the legal system which controls tax exemptions granted to charitable organizations operating in India. This study analyzes judicial court cases together with Income Tax Act sections 11 to 13 and section 115BBC for the following reasons:

• Evaluate the degree of tax evasion by analyzing both its types and frequency in the industry.
• Study how recent implementation of Chapter XII-EB exit tax regulations affects the operations of charitable organizations throughout India.
• Investigate relevant court decisions starting with M/s New Noble Educational Society v. The Chief Commissioner of Income Tax and Anr (2014) and Assistant Commissioner of Income Tax (Exemptions) v. Ahmedabad Urban Development Authority (2017).
• Examine the challenges carried by legitimate charitable organizations through investigation of tax authority discretion and valuation assessment challenges and compliance requirements.
• Preserve charitable organizations' tax exemptions by implementing proper protection measures which guarantee tax benefits until these safeguards remain effective.

These targets will secure philanthropic organizations' essential position in India's social welfare programs and support ongoing debates regarding their tax benefits. LEGAL FRAMEWORK GOVERNING TAX EXEMPTIONS Tax exemptions enable charitable institutions to prosper under the Indian tax structure which motivates philanthropic and welfare-related activities. Tax exemptions of charitable institutions are presently described by Sections 11, 12, and 13 of the Income Tax Act enacted in 1961. To prevent misuse of tax exemption privileges India adopted the provisions of Section 115BBC for anonymous donations. The Central Board of Direct Taxes (CBDT) performs decisive oversight to monitor tax compliance by charitable institutions under its legal mandate.

• Section 11: Income Exemption for Charitable and Religious Trusts
  • The tax break for religious and charitable institutions explained under Section 11 demands fulfillment of specific requirements.
  • A tax-exempt trust requires that its total income allocation to charitable religious activities exceeds 85% of its entire revenue.
  • A trust whose annual income distribution falls below 85% can set aside this fund during five years following the end of the financial year until it fulfills all Income Tax Act requirements for a specific charitable project.
  • Trusts have permission to accumulate their income which requires proper declaration and the use of funds must occur within the stated timeframe for their charitable purpose.
  • The Indian Income Tax Act gives charitable trusts an exemption for donations if donors specifically instruct that their contributions will become trust corpus.
     
• Section 12: Voluntary Contributions as Income
  • The income tax legislation under Section 12 states that voluntary contributions used by charitable trusts become taxable income.
  • Any money donated to the trust is treated as income except when donors specify their funds should support the permanent capital fund.
  • Corpus donations given specifically for the permanent trust capital remain untaxed if the funds are maintained appropriately.
     
• Section 13: Conditions for Exemption and Prohibition of Private Benefit
  • Tax exemption of charitable trusts becomes invalid when donors use trust funds to grant personal benefits to specific stakeholders such as trustees or their relatives or any individual with significant trust stake.
  • A trust loses its tax exemptions if its usage of funds exceeds the objectives noted in the trust charter.
  • The investment of trust funds must avoid disapproved instruments from the government like private company shares and speculative business ventures. The trust will lose its tax benefits when this rule is violated.
     
• Section 115BBC: Taxation of Anonymous Donations
  • The introduction of Section 115BBC dealt with the money laundering issue and the unverified financial donations problem within the charitable industry.
  • This section enforces tax obligations for anonymous contributions by establishing a definition for anonymous donations as voluntary payments whose donor remains unidentified or envelopes inadequate donation records.

 

Key Provisions of Section 115BBC

• Totally anonymous donations exceeding 5% of all donations or ₹1 lakh (in either case) become taxable at a 30% rate.
• The tax provision contains an exemption for religious trusts because donations to native religious institutions do not fall under this category. The section applies to institutions that operate as both charitable organizations and religious centers.
• The provision exists to reduce black money flows through trusts while guaranteeing donations originate from legal points of payment.

Regulatory Oversight by the Central Board of Direct Taxes (CBDT)

The Central Board of Direct Taxes assumes an essential role in supervising charitable institutions while enforcing all tax regulatory requirements. Its responsibilities include:

Registration of Charitable Trusts

• The Income Tax Act demands that any trust looking to gain tax exemptions must enroll under Section 12AA. A trust can receive its registration only if its activities prove compliance with charitable goals.
• Under the Finance Act of 2020, customers are required to re-register existing trusts through Section 12AB every five years to maintain continuous tax oversight.

Scrutiny and Compliance Checks

• The CBDT executes financial reviews and conducts audits of charitable organizations to uphold their tax compliance and find fund misuses.
• The Commissioner of Income Tax holds the power to dissolve trust registration when he discovers irregularities, thus subjecting the trust to exit tax rules under Section 115TD.

Guidance Through Circulars and Notifications

• The CBDT publishes circulars together with clarifications which serve as guidance to reveal charitable institutions about their tax duties and regulatory needs.
• The authorities now require charities to disclose donors who give more than ₹2 lakhs along with their names, PAN numbers, and address information for taxation purposes.

Investigation and Legal Action Against Tax Evasion

• The Income Tax Department now pursues multiple investigations to verify tax compliance and money laundering within charitable organizations which are under suspicion.
• Over 8,000 taxpayers received notifications from the Income Tax Department about their donations to charitable trusts which may allow tax avoidance schemes.
• The CBDT plays an essential role to supervise charitable organizations while preventing improper use of tax benefits for financial crimes or personal gain.

Tax Evasion in Charitable Institutions: Challenges and Cases

The practice of tax evasion within charitable organizations produces various challenges alongside specific documented instances. Tax exemptions used improperly by charitable institutions create rising suspicions about tax evasion although these institutions continue to lead important social developments. Several organizations take advantage of legal possibilities to conduct financial laundering as well as to redirect charitable funds into private pockets and distort accounting records for tax evasion purposes. Through increased monitoring and the implementation of more stringent laws to combat fraud, the government improved oversight.

Common Methods of Tax Evasion

• Diversion of Funds: Non-charitable activities and personal benefits of trustees together with their associates are among the ways that trusts redirect donated money. The deception occurs through both expense overinflation and moving money to artificial businesses which eventually pay it back to donors.
• Fake Donations and Bogus Receipts: Organizations give fabricated donation certificates to individuals and businesses for claiming Section 80G deductions in the Income Tax Act although there was no actual monetary donation. Through this arrangement, the trust along with the donor receives benefits at the cost of governmental tax losses.
• Misreporting of Expenditures: Organizations that manage trusts tend to inflate their operational and administrative costs in order to reduce their tax burden. Whenever these organizations inflate their financial expenses for fund utilization, they create an incorrect perception that funds are properly used but simultaneously redirect money elsewhere.
• Anonymous Cash Transactions: Section 115BBC grants organizations the authority to receive big money donations, yet some groups ignore its requirements by denying documentation. The received funds typically serve either to perform money laundering or serve illegal objectives.
• Manipulation of Land and Asset Transfers: Trusting institutions regularly purchase assets and land using their charitable status to generate profits through commercial sales and leases. The practice gives these entities access to tax exemptions when their profits remain untaxed.

Case Studies and Examples of Tax Evasion

• The ₹1,000 Crore Fake Donation Scam (2022): During 2022, the Income Tax Department investigated more than 1,000 charitable trusts spanning India which produced fake donation receipts amounting to ₹1,000 crore. Taxpayers benefitted from Section 80G donations which were redirected through artificial companies for double-sided tax avoidance.
• Raids on Educational and Religious Trusts (2019–2021): High-profile charitable trusts including both educational facilities and religious organizations experienced raids by tax officials during the period from 2019 through 2021. The tax protections provided to these institutions proved to be ineffective since authorities found evidence that showed institutions passing funds into real estate acquisitions and purchasing luxury items and accessing personal money accounts.
• The Case of a Prominent Medical Trust (2018): A well-known charitable hospital received conviction after its staff deliberately lowered their revenue reports to escape taxation responsibilities. The trust raised its operating expenses beyond reasonable levels while redirecting surplus money toward related corporate entities while creating donation and expenditure secrecy.

Government Action Against Tax Evasion

Indian government agencies have stepped up their efforts to combat charitable institution tax evasion by:

• Notices to Donors and Trusts
  The Income Tax Department delivered notifications to thousands of taxpayers who contributed large donations to doubtful charities. Taxpayers who asked for tax deductions needed to show proof of legitimate donation while demonstrating their donation's authenticity through these notices.
   
• Stricter Audit and Compliance Requirements
  Any trust collecting donations exceeding ₹2 lakh during one day must supply donor information which includes their name and PAN details along with their address for stopping anonymous financial backing.
  Any organization holding substantial assets together with foreign sponsorships must submit to thorough financial audits that verify their tax compliance.
   
• Penalties and Deregistration
  The CBDT removed the tax exemptions from several trusts that committed financial violations.
  Welfare institutions that misuse their tax-exempt status are subject to legal prosecution while also becoming responsible for exit tax liability according to Section 115TD.

Instigating tax evasion within charitable institutions represents a major concern that simultaneously damages public faith and diminishes national tax income. Honest philanthropic organizations benefit society, but in order to prevent fraud, society needs stronger enforcement. A new and forceful stance from the government demonstrates opposition toward misuse which will allow only authentic charities to obtain tax benefits.

Introduction of Exit Tax and Its Implications

Chapter XII-EB entered the Income Tax Act of 1961 during the 2016 Finance Act to represent a major change in Indian charitable institutions' tax regulations. This chapter includes three sections named 115TD, 115TE, and 115TF collectively referred to as exit tax provisions which tax trust and institutional received income in certain situations. The income tax provisions that seek to avoid tax exemption misuse have caused worry about their effects on legitimate charitable groups.
 

Chapter XII-EB and Exit Tax Provisions

• A tax must be paid by trusts and institutions through the application of Section 115TD:
• The tax benefits lapse when a trust loses Section 12AA registration or makes alterations in its purpose without obtaining new authorization making it non-eligible for exemptions.
• Any charitable institution that merges with another entity lacking charitable purposes or Section 12AA or 12AB registration status will trigger the exit tax.
• The failure to transfer trust assets during dissolution to an organization under Section 12AA or 12AB makes the trust subject to exit tax.
• The Trust's accreted income arrives from asset value calculations compared to liabilities while tax authorities assess fees according to the taxpayers' highest possible rate.
• Section 115TE imposes a penalty through simple interest at one percent per month or fractional month to the principal officer and trustee who fails to pay the accreted income tax by the deadline.
• The specified person becomes an assessee in default according to Section 115TF if the trust or institution fails to pay Section 115TD tax. Thus all default-related provisions in the Income Tax Act apply.
   

Impact on Genuine Charitable Institutions

• The exit tax provisions which target misuse of tax exemptions by charity institutions have generated worries among bona fide non-profit organizations.
• The implementation of Chapter XII-EB requirements creates excessive administrative obligations for organizations which pushes away funding from essential charitable duties (EY, 2023).
• Bona fide charities run the risk of substantial tax liabilities when they make unintentional errors or handle their records poorly according to EY (2023).
• Potential majority tax burdens make both charitable groups less likely to undertake organizational mergers or restructuring which obstructs operational development and reduces potential efficiency benefits (EY, 2023).
   

Concerns Over Double Taxation and Fair Market Valuation

• There are double taxation concerns about the exit tax because when accreted income receives tax treatment it might create secondary taxation opportunities.
• The process of determining Fair Market Value for intangible assets presents substantial difficulties to asset evaluation teams. Unbiased valuation methods for assessable under the provisions could create disputes that impose unwanted tax liabilities against charitable organizations.
   

Analysis of Whether Exit Tax Achieves Its Intended Purpose

• The main reason for implementing an exit tax aimed to stop tax-exempt assets from moving to non-charitable pursuits. The implemented provisions create a barrier against misuse but some experts question their effectiveness for meeting their original objectives.
• By implementing an exit tax the level of accountability within charitable institutions has increased thus ensuring assets receive proper usage for their intended philanthropic goals (Taxmann, n.d.).
• Strict regulations of the provisions potentially hurt genuine charities when they make minor mistakes which leads to operational limitations that discourage charitable work (EY, 2023).
• The integrity of the charitable sector relies on Chapter XII-EB exit tax provisions to stop tax exemption misuse yet this system requires careful balancing to achieve the right outcomes. Policy authorities need to develop improved regulations that defend genuine charity organizations from excessive restrictions as they work to stop improper activities.

Judicial Perspectives on Taxation of Charitable Institutions

Indian tax laws concerning charitable institutions underwent major developments due to significant legal decisions that specified and sometimes altered the defined eligibility requirements for tax exemptions. In this context two essential cases stand out as Ahmedabad Urban Development Authority (2022) and M/s New Noble Educational Society. Tax exemption policies have experienced profound evolution due to these decisions made by court. As these decisions established their position, they demonstrate how judicial bodies form regulations through their decisions.

Landmark Judgments

• Assistant Commissioner of Income Tax (Exemptions) v. Ahmedabad Urban Development Authority (2022)
  Under this case the Supreme Court analyzed how "charitable purpose" should be interpreted according to Section 2(15) of the Income Tax Act 1961. Towns planning and development activities performed by AUDA as a statutory body needed assessment to determine their qualification for tax exemptions under charitable purposes.
  
  Under Section 2(15) of the Income Tax Act 1961 the "advancement of any other object of general public utility" qualification exists within the definition of charitable purpose yet activities with business or commercial aspects together with services for payment are specifically excluded. According to the Court the basic public benefit of an activity does not automatically make it charitable when these activities come with commercial aspects. The judgment created limited conditions for qualifying operations as charitable purposes particularly for entities conducting activities containing commercial elements.
   
• M/s New Noble Educational Society v. The Chief Commissioner of Income Tax and Anr (2022)
  Section 10(23C) of the Income Tax Act examined the tax exemption requirements for educational institutions in this case. The Supreme Court evaluated which educational organizations could obtain tax exemptions while pursuing both educational and non-educational purposes.
  
  The Court specified that organizations need to operate exclusively for education-related functions without financial gain to earn tax exemption status. Non-educational objectives at an institution become a reason for rejection of tax-exempt status even when ancillary to education. The court made this decision to emphasize strict educational focus for institutions to receive tax exemptions.

Impact of Judicial Decisions on Tax Exemption Policies:

Multiple judicial rulings have redefined tax exemption policies which charitable institutions receive in India:

• The Ahmedabad Urban Development Authority case defined charitable purposes by excluding activities having commercial elements even when they bring public utility benefits. Strengthened oversight of tax-exempt entity applications now protects character-based non-profit entities by avoiding incorrect approvals.
   
• Educational institutions following the New Noble Educational Society decision need to concentrate exclusively on academic activities for tax exemption status. The new exemption criteria motivated educational and other institutions to evaluate their fundamental goals for compliance purposes.
   
• Government agencies have been prompted by court rulings to review and reinforce current tax exemption regulations in an effort to prevent legitimate charitable groups from taking advantage of tax breaks.
   

Role of the Judiciary in Shaping Regulatory Reforms:

• Judicial institutions maintain primary responsibility to explain laws while leading the development of regulatory reforms regarding charitable institution tax regulation.
• The judicial system interprets unclear aspects of tax legislation through their decisions to supply directives that help both taxpayers and tax authorities.
• The judiciary establishes checks on potential misuse of tax exemptions which results in only genuine charities receiving tax reliefs.
• When courts issue their decisions they force legislative entities to revise existing laws or adopt new regulations via which judges highlighted areas of ambiguity.
• The judiciary maintains both financial and operational accountability of charitable institutions by adjudicating disputes that define legal criteria for their activities.
   

Regulatory Reforms and Government Measures:

The Indian government introduced multiple regulatory changes which focus on boosting transparency together with accountability within nonprofit institutions. The government has implemented additional oversight of substantial donations while enforcing strengthened reporting requirements for non-profit organizations through measures that include Central Board of Direct Taxes (CBDT) circulars alongside legislative changes
 

Increased Scrutiny of Large Donations:

• The government enacted regulations which demand charitable organizations to reveal information about donors making contributions exceeding ₹2 lakh.
• The government has set this regulation to fight money laundering while verifying that major contributions derive from lawful fund sources.
• Nonprofit organizations are concerned about the new rule because it raises the possibility of donor privacy infractions and significant compliance-related administrative expenses.

Stricter Compliance and Reporting Norms:

• Organizations that obtain foreign contributions must follow increased compliance standards since the Foreign Contribution (Regulation) Amendment Act (FCRA) of 2020 was passed.
• Organizations registered under FCRA must stop their practice of sub-granting which restricts joint projects among nonprofits.
• Industrial banks must use a dedicated State Bank of India New Delhi bank account to handle all foreign donations which improves oversight but creates operational problems.
• Organizations should now spend at least 80% of received foreign funds directly on program activities since administrative costs are limited to 20%.

CBDT Circulars and Clarifications:

• The CBDT takes actions through circulars to provide tax explanation for charitable trusts.
• The updated Rule 17AA now specifies the particular records which charitable trusts must maintain which includes donor identification and recipient information.
• Organizations which fail to adhere to the required standards will lose their Section 11 Income Tax Act tax exemption benefits.

Recent Amendments and Proposed Reforms

• Through the provisions of the Finance Act 2023 several changes were established for charitable organizations.
• Since the recent law change charitable organizations can apply only 85% of their donations to other organizations to maintain their tax-exempt status causing difficulties for grant-making organizations.
• The DARPAN portal requires NGOs to complete mandatory registration as well as performing KYC checks which leads to better transparency yet creates additional administrative tasks.

Challenges Faced by Genuine Charitable Organizations

Legitimate charitable organizations have challenges as a result of regulatory regulations intended to promote responsibility.

• Compliance Burden and Administrative Difficulties: Additional administrative human resources are needed to meet higher documentation and reporting standards, which may disrupt essential operational tasks. The demands of compliance standards on people and finances provide serious challenges for small NGOs.
• Fear of Arbitrary Cancellation of Registration: The new regulatory framework has caused NGO leaders to worry about their organizations being arbitrarily de-registered especially under the FCRA. India receives partial scores from the Financial Action Task Force (FATF) regarding its handling of measures to protect nonprofit activities though FATF has noted the demand for appropriate enforcement standards.
• Legal Ambiguities and Discretionary Powers of Tax Authorities: Because tax rules have vague interpretations that provide tax authorities discretion, nonprofits experience inconsistent enforcement from tax authorities. Because enforcement is unclear, it is challenging to carry out strategic planning and to function efficiently.
• Difficulty in Valuation and Proving Tax Compliance: The evaluation of asset values and service expenses remains difficult because it covers in-kind presentations. Accurate values remain vital for tax compliance because current guidelines remain ambiguous thus producing disputes with tax authorities.
   

Recommendations for a Balanced Approach

A balanced approach for taxation needs the following guidelines to achieve system fairness alongside nonprofit growth:

• A standardized approach for determining fair market values of assets should be established by the government to eliminate confrontations between tax officials and charitable organizations.
• Exit tax calculations should remove assets obtained through taxed income because this prevents double taxation from causing unnecessary financial difficulties for nonprofits.
• Relieved compliance requirements should exist for trusted non-profit organizations.
• A compliance system with multiple levels should be implemented so experienced trustworthy organizations face reduced reporting obligations but newer organizations and high-risk entities receive intensified oversight.
• The government should give authorization to combine nonprofits affiliated with Sections 12AA and 10(23C).
• The government should support merger opportunities between Income Tax Act Section 12AA and Section 10(23C) registered organizations that aim for similar humanitarian objectives. Such measures will advance both competency and resource optimization and efficiency in the non-profit sector.
• The introduction of judicial review procedures should exist to evaluate registration terminations. A court or quasi-judicial entity should create an independent system to examine tax-exempt status and registration cancellations of nonprofits to defend their rights through proper review processes and prevent government overreach.

Conclusion
Social economic development of India benefits from charitable institutions because they work alongside government programs to deliver services related to education and healthcare and poverty reduction and disaster aid. Thanks to their important role the Indian government throughout history has implemented tax exemptions to boost donor generosity.

The introduction of strict regulatory norms came about because authorities needed to address questions regarding the improper use of tax exemptions that led to tax evasion and money laundering as well as fraudulent donations. The regulatory efforts to stop financial misconduct have simultaneously caused legitimate nonprofits to bear increased administrative and financial costs leading to doubts regarding how effectively the sector receives support.

Chapter XII-EB together with exit tax provisions found in Sections 115TD, 115TE, 115TF has brought substantial changes to non-profitolding organization tax treatment. An exit tax implemented on charitable organizations' built-up income serves the government's purpose of protecting tax-free resources against misuse during cancellation of registration and non-charitable merger events or asset disposal failures. Please address the ongoing concerns about double taxation and asset valuation methods and authorities' discretionary powers because they might endanger real charitable entities.

Judicial pronouncements, such as Assistant Commissioner of Income Tax (Exemptions) v. Ahmedabad Urban Development Authority (2022) along with M/s New Noble Educational Society v. The Chief Commissioner of Income Tax and Anr (2022) developed further regulations. Judicial decisions have revised Section 2(15) definitions regarding charitable activities and established firm requirements which establish educational institutions need exclusive educational operations to receive tax benefits. Tax exemption policy clarity through these court decisions has simultaneously created obstacles for qualifying institutions which makes compliance procedures more difficult to meet.

The regulatory framework became stronger through government actions which included both increased donation scrutiny and tighter compliance requirements and reporting standards as well as CBDT circulars. Nonprofit organizations that operate genuinely have expressed a combination of mistrust about arbitrary termination of registration as well as excessive compliance requirements and legal nuances. The present problem exists in making sure these laws focus on fraudulent entities yet still allow legitimate charitable programs to function.

Regulatory changes in charitable organizations need to be implemented because they help protect the public from financial abuse and the breakdown of trust systems. Genuine nonprofit organizations need proper consideration during the implementation of these measures to prevent unnecessary hurdles. The development of transparent nonprofit organizations in India requires dual enforcement strategies for dealing with unlawful entities and supportive measures for genuine organizations.

References:
Legislation and Regulations:

• The Income Tax Act, 1961, §§ 11-13, 115BBC, 115TD-115TF (India).
• The Finance Act, 2016 (India).
• The Finance Act, 2020 (India).
• The Foreign Contribution (Regulation) Amendment Act, 2020 (India).
• The Societies Registration Act, 1860 (India).
• The Indian Trusts Act, 1882 (India).
• The Companies Act, 2013, § 8 (India).

Case Laws:

• Assistant Commissioner of Income Tax (Exemptions) v. Ahmedabad Urban Development Authority, (2022) 143 Taxmann.com 278 (SC).
• M/s New Noble Educational Society v. The Chief Commissioner of Income Tax and Anr., (2022) 143 Taxmann.com 276 (SC).

Government and Regulatory Documents:

• Central Board of Direct Taxes (CBDT). (2020). Guidelines for re-registration of charitable trusts under Section 12AB. Retrieved from https://www.incometaxindia.gov.in
• CBDT Circular No. 17/2023. Clarifications on taxation of charitable trusts. Retrieved from https://www.incometaxindia.gov.in

Books, Reports, and Articles:

• EY. (2023). Union Budget 2023: Strict clauses continue to challenge charitable institutions. Retrieved from https://www.ey.com
• FMSF India. (n.d.). Tax on accreted income. Retrieved from https://www.fmsfindia.org.in
• Taxmann. (n.d.). Exit tax on accreted income of trusts & institutions under Sections 115TD to 115TF. Retrieved from https://www.taxmann.com
• ICNL. (2024). The regulatory regime debilitating India's nonprofit sector. Retrieved from https://www.icnl.org
• VakilSearch. (2023). Legal changes on NGO registration in India. Retrieved from https://vakilsearch.com
• Amnesty International. (2024). FATF raps Indian government over risks to non-profits. Retrieved from https://www.amnesty.org

News Articles:

• Business Standard. (2023, April 18). 8,000 tax evasion notices to taxpayers who sought exemption for donations. Retrieved from https://www.business-standard.com
• Economic Times. (2023, April 18). Income Tax Department sends notices over donations to charitable trusts. Retrieved from https://m.economictimes.com
• The Times of India. (2025, March 20). Fake donations to parties, charities under tax lens. Retrieved from https://timesofindia.indiatimes.com
• Manorama Online. (2025, February 5). Mega offer scam: Fraud surpasses ₹1,000 crore mark. Retrieved from https://www.onmanorama.com
• Manorama Online. (2025, February 12). Fake CSR scam: How Ananthu Krishnan tricked thousands into donating money. Retrieved from https://www.onmanorama.com