The Reliance charitable trust, which runs the eponymous hospital, has taken the lead in challenging the decision of the tax authorities to cancel its registration. The development is being closely tracked with the tax department rejecting the registration of several well-known charitable organisations in Mumbai on the grounds that they have been carrying out ‘commercial activities’.
Grappling with a similar situation, National Health & Education Society, the non-profit managing the PD Hinduja Hospital, is in the process of moving the Income Tax Appellate Tribunal (ITAT), said a group official.
Sources said the Breach Candy Hospital Trust will soon hold a meeting to decide its response.
Multiple top-rung as well as smaller hospitals found their registration under I-T Act rejected by the department as they came up for renewal in March 2026. A registration under Section 12AB of the I-T Act is a prerequisite for charitable and religious trusts, NGOs, and non-profit institutions for claiming tax relief.
At the hearing of the stay application in April by Reliance Foundation Hospital Trust, which manages Sir HN Reliance Hospital & Research Centre, the ITAT bench observed, “We are of the considered view that the controversy raised is such which warrants an early and expeditious adjudication on merits rather than any interim interdiction at this stage which may, in effect, pre-empt the final outcome.. the ends of justice would be adequately met if the appeals themselves are taken up for out-of-turn and priority hearing.”
A Reliance group spokesperson did not comment as the matter is sub-judice.
A registered trust is not only spared from paying tax on the ‘surplus’ it generates, donors to such entities can also claim deduction to lower taxable income.
With the tax department attributing profit motive to non-profits, arguments may focus on accumulation and utilisation of surplus.
“NGOs need sustainable solutions besides periodic donations. So, many charitable organisations existing for decades undertake some commercial activities. Even the law permits 20% of receipts from commercial activities, subject to conditions. Sustainability will result in generation of some surplus that’s utilised for future charitable activities,” said the director EQX Business Consultancy. He felt targeting charitable organisations for generating surplus or undertaking commercial activities within the permissible limits is counter-productive.
The international spiritual organisation Iskcon finds itself in a similar situation with one of its key trusts. Sources said this may be linked to the organisation’s vegetarian restaurant Govindas.
Responding to ET’s query, ISKCON India spokesman, said, “Since our registration in 1971, we have been engaged in a broad spectrum of charitable activities that have benefited millions. In recognition of these efforts, ISKCON has enjoyed 12A status for over 50 years without interruption. Therefore, the recent non-renewal of our 12A status, along with the grounds cited for such action by the tax department, is unjustified and untenable.” He said the organisation is in the process of appealing and has full faith in the judicial process.
Source from: https://economictimes.indiatimes.com/news/company/corporate-trends/reliance-trust-challenges-i-t-move-to-cancel-registration/articleshow/130810467.cms?
