Indian companies are seeking tax break from the government to increase their share of endowments to higher education institutions.
“Corporations have to give endowments and we support a tax break of 100 per cent towards the same. If you want more research to take place, more donations are required and the government needs to encourage this through tax breaks,” Rajan Mittal, vice chairman and managing director of Bharati Enterprises told Business Standard on the sidelines of the FICCI Higher Education Summit in Delhi.
Amit Mitra, secretary general, FICCI, supported Mittal’s argument saying tax breaks would encourage more business leaders to come forward and donate to higher education institutions.
At present, donations by companies to higher education institutions overseas are tax exempted as these institutions are run by trusts. However, many of the trusts running education institutions in India are exempt from tax only if they are registered under the charities commissioner or as a section 25 company under the Income Tax Act.
Many companies donate to international institutions as the Indian Income Tax department does not recognise these endowments as legitimate grants but as a tax evading exercise. Also, these business houses say they prefer transparency with regard to the use of funds donated by them.
Last month, Harvard Business School received an endowment of $50 million from the Tata Group. This has been the largest grant the school received from an international donor in its 102-year history.
The funds will be used to build a new academic and residential building on the school’s campus in Boston. Harvard said it hopes to break ground for the building, which will be named Tata Hall, next spring.
Prior to this, Anand Mahindra, head of the Mahindra Group, donated $10 million to Harvard, where he earned his undergraduate and master’s degrees.