Salaries of nuns and priests working as teachers are not exempted from TDS

The Madras High Court today ordered status quo on an Income Tax circular stating that salaries of nuns and priests working as teachers are not exempted from Tax Deduction at Source (TDS).

Justice R. Mahadevan ordered the status quo for two weeks on the circular issued by the Principal Chief Commissioner of Income Tax, passing interim orders on the petitions by Nirmala Education Society, Coimbatore, and Stella Maris College Chennai.

The petitioners have challenged the circular as well as the consequential order passed by Chief Commissioner of Income Tax on November 12 this year and the Director of Treasuries and Accounts Office, Chennai.

According to the petitioners, taking into account the religious status of the members of the religious Congregation of the petitioners and the religious and charitable nature of the society, the Income Tax authorities had in January 1944 given TDS exemption to such income.

Similarly, on a representation received from the Secretary of the Madras Catholic Education Council, the Officer of the Commissioner of Income Tax, (then) Madras had categorically stated on 30.01.1969 that the salary received by priests and religious are subject to an overriding title by the congregations and their income is exempt from tax, they said.

From the time of embracing religious life, if at all they receive any benefit, it is only for the religious congregation or on its behalf. Therefore, any property or earning or salary accrued to the Catholic nuns or monks automatically becomes the property of the religious congregation to which they belong.

Before civil law, they sever their connections with the natural family and become part of the spiritual family.

Contending that this position had been upheld by the Supreme Court and high courts in various judgments, the petitioners sought quashing the circular and consequential orders passed thereof deducting TDS from the salary of nuns and priests.

Source: Business Standard

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