Prasar Bharati exempted from paying income tax

New Delhi

In a major relief to the country?s public broadcaster, the Prasar Bharati has been exempted from paying any income tax, with the smooth passage of the Finance Bill in the Lok Sabha.

As per one of the amendments in the Finance Bill, 2012 which was passed by the Lok Sabha on Tuesday, ?any income of Prasar Bharati (Broadcasting Corporation of India)? is now mentioned among entities who will not have to pay tax.

Though the Prasar Bharati does not pay income tax currently since it does not earn profits, the exemption comes as a big relief.

Till now Prasar Bharati had to maintain accounts at nearly 600 Drawing and Disbursal offices (DDOs) to meet the requirement of Income Tax procedures, officials said.

The public broadcaster will also be spared of the financial burden of engaging tax consultants and chartered accountants.

Officials of the Public Broadcaster said that while the decision to exempt Prasar Bharati from paying income tax was a welcome step, this demand had not found a very receptive audience among Finance Ministry officials for a long time.

?The proposal to exempt Prasar Bharati had been there but only after Information and Broadcasting Minister Ambika Soni examined the matter and decided to raise it with Finance Minister Pranab Mukherjee that the process caught pace,? a senior official said.

The official said that Prasar Bharati worked in national interest and the drain of its resources was ultimately being borne by the government.

?The exemption is an important step to improve Prasar Bharati?s financial affairs and also a great recognition of the important role it plays,? said the senior official.

Officials point out that the public broadcaster?s relations with the taxman have kept changing in the past.

Under Section 22 of the Prasar Bharati Act of 1997, it was exempted from paying income tax. The provision was, however, deleted in the Finance Act of 2002.

Following the changed rules, Prasar Bharati after consultations with the Finance Ministry, registered itself as a charitable organisation and availed tax benefits.

However, the Finance Act of 2008 again changed the rules and the definition of ?charitable purposes? was amended. The Finance Ministry said that it would decide whether an activity was charitable or not on case by case basis.

The Prasar Bharati took up the matter with the Central Board of Direct Taxes and sought to be treated as a ?charitable organisation? since it was a public broadcaster.

Official sources said that it was learnt that the group of ministers which was looking in to the affairs of Prasar Bharati had also felt that withdrawal of exemption from Tax would land Prasar Bharati in financial hardship.

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