Feb 15: The tea industry has asked state governments to be lenient with donations. Tea producers in West Bengal have asked the government to allow donations in the nature of relief measures as a deduction from agricultural income tax up to a certain limit. In Assam, producers have asked for the removal of all limits on deduction from agricultural income tax, especially for donations made to charitable, cultural and sports organisations in the state.Tea companies with gardens in West Bengal have asked for a deduction on the lines of the Agricultural Income Tax Acts of Tamil Nadu, Kerala and Assam. This allowance, up to a certain limit, if incorporated into the rules would help the industry in north Bengal to meet its local obligations, said a tea producer of the Dooars. The state agricultural income tax in West Bengal is 50 per cent.
"Tea estates have often been approached by the state for donations for relief measures due to natural calamities like annual floods which cause complete disruption ofcommunications. Moreover, extensive damage is caused at times due to erosion effecting labour quarters, snags in water supply systems as well as siltation problems at gardens", said the producer.
Assam, Kerala and Tamil Nadu provide certain provisions for deduction from state agricultural income tax for donations made for charitable purposes.
"A deduction from agricultural income tax should be made for these purposes exclusively", he added. Certain donations such as to the Chief Minister's Relief Fund and other recognised funds or institutions are allowed as deduction under section 80G of the Income Tax Act of 1961.
Under the Assam Agricultural Income Tax Act, provision for deduction on donations is available under rule (2)(2)(i), which allows deductions for amounts actually spent for charitable purposes, subject to a minimum of Rs 250 and a maximum of Rs 5 lakh, or 10 per cent of the total agricultural income, whichever is less.
According to top producers belonging to the largest tea-producing state,"the tea industry in Assam is becoming increasingly involved in social welfare projects arising out of concern of its commitments to the society at large, especially pertaining to the support provided to charitable and sports organisations. Hence there should be no limit under the Agricultural Income Tax Act on donations placed by the tea industry.
Assam has a state agricultural income tax rate of 45 per cent. Tea producers in Assam have appealed for certain allowances on donations in the state. "It is impossible to check on the real use of the donated amount as no separate account is maintained for overseeing the correct use of the funds. The funds become a single mass in the hands of the donee, losing their individual identity, thereby leading to the possibility of real donors being denied relief", a top tea producer said. "Moreover, no differentiation is made between donations to corpus and to working funds, with money being spent in states other than Assam. The stipulation in the clause in the StateActwhich says that such sums should actually be spent in the state of Assam should be deleted", he added.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
