‘Major change in edu field’: Tax experts flag SC order challenges

The Supreme Court, in its order passed on Wednesday, was categorical that the object of educational institutions, which function under the aegis of trusts or societies and seek tax exemption under section 10 (23C) of the Income-tax (I-T) Act, should be function "wholly, solely and exclusively" for the purpose of education. If the institution is profit-oriented it would not be entitled to the tax exemption.

- Lubna Kably

Various important issues have been discussed in the order, which have far-reaching implications. To begin with, the apex court has taken a very narrow meaning of the term education. "Education, ie: imparting formal 'scholastic' learning is what the I-T Act provides for under the head of charitable purposes, under section 2(15)," states the order.

Its stand is similar to the SC's decision dating back to 1975 in the case of Loka Shikshana Trust. Subsequently, based on facts of the case, various high courts took a liberal approach.