Endowment Tax
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Endowment tax is basically the taxation of endowments or financial assistance. In Cambridge, Massachusetts the authorities have recently proposed that major universities such as the Massachusetts Institute of Technology should be subjected to taxes, on which exemptions were granted previously.
A financial endowment may be defined as a transfer of property or money that has been donated to an institution. However, the basic agreement in case of these assistances is that the asset that has been transferred needs to be invested by the recipient.
It has been seen that a couple of the richest universities of the US receive endowments in excess of a billion dollars. The House Ways and Means Committee in the US has also questioned the non profit status enjoyed by certain types of organizations like the hospitals.
Endowment Taxes in India
Over the years Indian companies have been asking for a break from endowment taxes so that they can provide the institutions with more funds. Prominent businessmen like Rajan Mittal, the Vice Chairman cum Managing Director of Bharati Enterprises have lent their support towards giving business organizations 100 percent break from endowment taxes.
He has reasoned that this benefit is necessary so that companies could contribute towards better research in the higher educational sector. His statements have found support from other well known names in the Indian business fraternity such as Amit Mitra, who works as the secretary general of the FICCI.
As of now, Indian companies can provide financial aid to educational institutions that are located outside the country as they are operated by trusts. In India, trusts that run educational set-ups can receive the benefit only if they are acknowledged as a section 25 organization as per the Income Tax Act or under the charities commissioner.
Lot of companies provide financial aid to international education institutes and the main reason for this is the attitude of the Income Tax Department, which sees such transactions as tax evasion exercises.
These business houses also prefer to be transparent when it comes to detailing the usage of funds spent by them.
Last Updated on 2/22/2012
A financial endowment may be defined as a transfer of property or money that has been donated to an institution. However, the basic agreement in case of these assistances is that the asset that has been transferred needs to be invested by the recipient.
Endowment Taxes in India
Over the years Indian companies have been asking for a break from endowment taxes so that they can provide the institutions with more funds. Prominent businessmen like Rajan Mittal, the Vice Chairman cum Managing Director of Bharati Enterprises have lent their support towards giving business organizations 100 percent break from endowment taxes.
He has reasoned that this benefit is necessary so that companies could contribute towards better research in the higher educational sector. His statements have found support from other well known names in the Indian business fraternity such as Amit Mitra, who works as the secretary general of the FICCI.
As of now, Indian companies can provide financial aid to educational institutions that are located outside the country as they are operated by trusts. In India, trusts that run educational set-ups can receive the benefit only if they are acknowledged as a section 25 organization as per the Income Tax Act or under the charities commissioner.
Lot of companies provide financial aid to international education institutes and the main reason for this is the attitude of the Income Tax Department, which sees such transactions as tax evasion exercises.
These business houses also prefer to be transparent when it comes to detailing the usage of funds spent by them.
Last Updated on 2/22/2012
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