Most charity hospitals evade tax, says CAG report
A performance audit of India's charitable hospitals has revealed that a majority of the institutions is misusing tax breaks. The Comptroller and Auditor General (CAG) in its report has pointed out that Income tax exemptions worth hundreds of crores have been given to hospitals claiming to be charitable institutes, but they may be doing little or no charity.
The auditors found that Delhi, Kerala, Rajasthan and Tamil Nadu had no process of identifying hospitals that were evading tax.
According to CAG, many charitable trusts receiving significant amounts in gross receipts were not being selected for scrutiny by the I-T department.
On the basis of data from Charity Commissioner in Mumbai, the CAG analysed 10 trust hospitals and found that a majority did not fulfil any conditions of Bombay Public Trust Act. The Bombay Public Trust Act which governs charitable trusts in Maharashtra, required trusts to fulfil certain conditions - including setting aside 10% of beds for free treatment of the poor and 10% for treatment at concessional rates and putting 2% of total billing into an indigent patient fund to treat the poor.
Since these hospitals are not identified under I-T Act, the hospitals continue to get exemption worth crores despite flouting the conditions.
The audit report has found that these 10 hospitals alone had "availed non-justified exemption" that amounted to Rs 77 crore.
According to a TOI report, Section 80G of the I-T Act, which provides exemption to donations that charitable trusts receive, stipulates that receipts issued to the donor should bear a reference number and date of the order. However, the audit found that section 80G certificates were available in just 10% of 87 cases in the standalone hospital category.