Unlocking philanthropic capital

India has always had a very rich tradition of giving. Philanthropy In the Union Budget 2024, the government has taken some positive steps towards rationalisation of charity tax provisions in the Income-tax Act, 1961 relating to administration and compliance of charitable institutions, through four specific amendments which can promote simplification, flexibility and scale for the not-for-profit sector: Simplification : Taxability of charitable institutions is currently governed by two regimes--Section 10 relating to educational and hospital charitable institutions, and Sections 11 to 13, relevant for all types of charitable institutions. Taxability of charitable institutions is currently governed by two regimes--Section 10 relating to educational and hospital charitable institutions, and Sections 11 to 13, relevant for all types of charitable institutions. Flexibility: There are two proposals that can lend some additional flexibility to charitable institutions: Delay in applying for charity registration could jeopardise tax exemption status of institutions, potentially triggering levy of exit tax. This review provides a great opportunity to not just further rationalise and simplify the tax regime for charitable institutions, but also align it with the socio-economic environment where strategic philanthropy can play a catalytic role in India’s development trajectory and partner with the government in achieving its social objectives faster and more efficiently.