No need to deduct TDS from payment of the religious Priests and Nuns; Madras HC [Read Judgment]

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In a recent Judgment The Correspondent, Holy Cross Primary School vs The Central Board of Direct Taxes, the Madras High Court has quashed order insisting upon the petitioner to deduct TDS from the salaries of the Religious Nuns.

The petitioners are in Catholic Institutions, religious Priests and Nuns who have been employed in the respective Schools/Colleges owned and administered by Dioceses, Congregation or institutions.

The only point which is raised is whenever salaries are directly paid by the Government to the concerned religious Priests or Nuns, who are working in the schools owned by Catholic Dioceses and Congregation, TDS is sought to be deducted, whereas the concerned religious Priests and Nuns do not take the salary as their individuals salaries instead they are depositing the same to the concerned Diocese or Congregation or institution only.

The petitioner relied upon the communication of the income Tax Department pursuant to Division Bench order seeking exemption. Therefore, the only contention is that the TDS should not be deducted insofar as to the religious Priests and Nun’s salary, which have been paid by the Government.

The Single bench of Justice B Rajendran passed the following order;

(1) Every individual viz., Priests or Nuns has to specifically give an undertaking affidavit to the Income Tax Department that his/her entire salary as a teacher/non teaching staff or in any other capacity has to be paid by the Government directly to the Congregation or Diocese, to which he belongs which has already been exempted from payment of income tax.

(2) Similar affidavit will also be filed before the Government of Tamil Nadu, Joint Director of Collegiate Education, District Education Officer, District Elementary Education Officer, and Pay and Accounts Officer, by the congregation and the individuals and the affidavit to be filed within a period of two weeks from the date of receipt of a copy of this order. It is also made clear that this order will only enure to the benefit of those Congregation or Diocese who have already obtained exemptions from the Income Tax Department.

(3) In the said affidavit, they will also state that all the payment made by the Government directly to the Congregation or Diocese is in full satisfaction of their salary as claimed by the schools and they will not have any further claim insofar as the payment of salary to them as it is directly made to the Congregation or Diocese. As according to them, it is the ultimate, final beneficiary which is receiving the salary.

The Court also observed that Government is paying authority, the Income Tax Department on receipt of such affidavit and on their satisfaction would give a certificate or a letter to the Government of Tamil Nadu that they need not deduct TDS insofar as the Priests and Nuns are concerned because they are not paying salary to the individual which are now being paid only in the name of the Congregation or Diocese only.

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