EDUCATIONAL AND MEDICAL institutions under the tax lense

The Associated Chambers of Commerce and Industry of India (Assocham) has made a strong case for bringing in all educational and medical institutions, including hospitals run on commercial considerations, under the tax net. Also, the personal account number (PAN) and bank account data should be used in a scientific manner to identify individuals evading tax. In a representation sent to the Finance Minister, Assocham has stated that most of the educational and medical institutions and hospitals are being run on a commercial basis but they pay no tax.
The reason for this is that an educational institution is not recognised by the education board or university unless it comes under a society or trust. Accordingly, many of the educational institutions operate under charitable trusts or society and become eligible for exemption either under Section 10(23C) or Section 11 of the Income Tax Act.
Assocham has said that there is an urgent need to utilise the data with the Income Tax Department scientifically to identify persons who are not within the tax net. This needs a focused strategy and can initially be started as a pilot project in metropolitan cities.
For this purpose, a comprehensive analysis is required of the PAN data, the voter list and the list of bank accounts. Banking in the metropolitan cities, by and large, is computerised and as such it will not be very difficult to obtain a list of bank accounts with names and addresses of customers from these banks.
At present, there is no linkage of PAN with the bank account.
Earlier, directions were given that no bank account should be opened unless the account holder gave his PAN or gave a declaration that he or she did not have one. However, the same could not be implemented because of the objections raised by banks as it hampered their business.
The banks can be asked to submit a list of all bank accounts without PAN. A timeframe may be given to the banks to collect PAN from each of their account holders within a time-bound period, say one month or two months. Thereafter, every year, the bank may be asked to submit two lists of bank accounts, one with PAN and another without, giving the aggregate of the deposits and withdrawals during the year.
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About Nitin Aggarwal

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