Supreme Court shocked at number of non-tax paying NGOs in India

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With the government cracking the whip on NGOs for alleged violation of foreign funding rules, the Supreme Court has also taken a serious view of mushrooming of about 30 lakh such bodies across the country and many of them not filing Income Tax returns for years.

The apex court, which has been seized of the matter for nearly five years and had ordered CBI to probe into charges of misappropriation of funds by many NGOs, wanted to know if there was any regulatory body to look at the size and magnitude of the problem. “This is a major problem. These are mind-boggling figures,” a bench headed by Chief Justice T S Thakur said, adding that “lakhs of societies are getting money from all over the world”.

“Is there any recommendation by the Law Commission to frame legislations for effective regulation and transparency in the funding of such NGOs.

“Whatever has happened in the past, like siphoning of money etc, is difficult to go into, but for the future, transparency has to be there,” the bench, also comprising Justice A M Khanwilkar, said while appointing senior advocate Rakesh Dwivedi as amicus to assist the court in the matter. “Keeping in view the nature of the controversy and the magnitude of the problem arising on account of as many as 29,99,623 societies registered in this country, we request Rakesh Dwivedi, senior advocate, to assist this court as amicus who has graciously agreed to do so.

“The Registry is directed to furnish him a copy of the writ petition and connected papers including the previous orders passed by this court within two days,” the bench said. Meanwhile, the CBI counsel filed several reports, documents and CDs in compliance with the court’s earlier orders, giving the number of NGOs registered in various states, which showed Maharashtra had over five lakh voluntary bodies, Bihar 61,000 and Assam 97,000.

CBI also told the court that governments of Karnataka, Odisha and Telangana have still not complied with its earlier order.

Petitioner advocate M L Sharma sought time to make his submissions, after which the bench posted the matter for September 23. CBI had in September last year informed the apex court that less than ten per cent of over 30 lakh NGOs functioning across the country had submitted their returns or balance sheets and other financial details to the authorities.

The dismal picture was presented by the CBI to the court last year on the basis of the income-expenditure statement of a total of 30,81,873 NGOs in 26 states and seven Union Territories. CBI, in its second affidavit, had said that approximately 9.33 per cent of the registered NGOs met the criteria of filing tax returns. Before this, the agency had filed an affidavit in January last year submitting that out of 23,95,579 NGOs in 21 states, approximately 2,43,955 of them had filed their balance sheets with the authorities and, in seven UTs, of the 73,213 NGOs, only 50 had submitted their returns.

At that time, only 10.24 per cent of the registered NGOs had complied with the prerequisite of providing balance sheets and other financial details. CBI had earlier said it would require another couple of months to compile all information as it was expecting more information from some state governments and urged the bench to pass order to the governments of Karnataka, Odisha and Telangana to furnish all information as per court directions.

It had said that out of the total 30,81,873 NGOs, only 2,90,873 had filed their annual returns and Karnataka, Odisha and Telangana had so far only provided the names and number of the voluntary bodies registered in the respective states without furnishing information about their balance-sheets.

CBI had said it had received complete information from Assam, Arunachal Pradesh, Uttarakhand, Uttar Pradesh, Goa, Jammu and Kashmir, Nagaland, Jharkhand, Manipur, Meghalaya, Mizoram, Sikkim, Tripura, Kerala, Punjab, Maharashtra, Bihar, Rajasthan, Gujarat, West Bengal, Himachal Pradesh, Tamil Nadu, Chhattisgarh, Andhra Pradesh, Haryana and all the seven union territories Andaman & Nicobar, Pondicherry, Daman and Diu, Lakshadweep, Dadar and Nagar Havali and UT of Delhi.

The government had earlier said the NGOs would not be eligible for any grant unless they complied with the condition of filing statements of income and expenditure of last three years. The apex court had expanded the scope of the PIL which was filed in 2011 against an NGO, Hind Swaraj Trust, run by anti-corruption crusader Anna Hazare. The PIL had sought probe into alleged embezzlement of funds.

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