2 MAY, 2011, 03.37AM IST, DEEPSHIKHA SIKARWAR,ET BUREAU

http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/religious-trusts-non-profit-organisations-to-face-geater-scrutiny/articleshow/8138550.cms

MUMBAI: The government plans an umbrella law to tighten financial scrutiny and regulation of religious trusts and non-profit organisations as it looks to allay global concerns about money laundering and terrorist financing activities by such entities.

It is also likely to make public names of organisations that claim tax exemption to ensure greater transparency. Some of India's religious trusts are among the richest in the world. Last year, Tirumala temple, managed by Tirumala Tirupati Devasthanams, collected about `575 crore in cash alone. Although most trusts that manage big temples have now been taken over by their state governments, authorities are concerned about the smaller ones that are run privately.

"The law is under examination," a finance ministry official told ET. An inter-ministerial panel has drawn up the contours of the law that has proposed a centralised authority to deal with the non-profit sector, a practice followed in the US, Bangladesh and Nepal.

At present, India has different laws administering such bodies: the Indian Trusts Act, Bombay Trusts Act, Foreign Contribution Regulation Act, Societies Act, trusts acts in various states and the Companies Act. Multiple Acts make monitoring of these entities difficult, raising concerns on the source and outflow of funds.

"There is a need for a national framework legislation which will help create an ecosystem to support the NPO sector. This will bring transparency and accountability through promoting public disclosure and enhance financial reporting within the voluntary sector," said Parul Soni of Ernst & Young Pvt. Ltd.

Finance Ministry to consult states

The finance ministry has initiated discussions on the single-law proposal and will consult state governments as some areas relating to NPOs fall under the state and concurrent lists of the Constitution. "The final contours of the framework would emerge after discussions with all stakeholders and state governments," the official said. However, the government is expected to complete the process by March 2012, he said.