Another Setback For Think-Tank 'Centre For Policy Research': After FCRA, Tax Exemption Status Revoked

The Centre for Policy Research (CPR), a public policy think tank, has lost its tax exemption status, nearly four months after its license for receiving foreign donations was revoked.

CPR has been working with various state governments and Central ministries for almost five decades.

CPR's President, Yamini Aiyar, referred to the loss of tax exemption as a "debilitating blow."

This setback for CPR comes after the think tank received a show-cause notice from the Income Tax (IT) authorities in December, accusing it of engaging in activities “not in accordance with the objects and conditions” under which it was registered.

The IT authorities listed several activities in the notice and cancellation order, including CPR's involvement in the Hasdeo movement against coal mining in the Chhattisgarh forests.

Additionally, the authorities highlighted the receipt of Rs 10.19 crore since 2016 for CPR's Namati-Environmental Justice Programme, which was allegedly primarily used for litigation and complaints rather than research.

The core argument put forth by the IT Department is that supporting litigation is not a charitable activity and, thus, CPR stands to lose its tax exemption.

Denying the allegations, CPR is expected to file an appeal against the 30 June order in the Income Tax Appellate Tribunal (ITAT).

Yamini Aiyar, President and Chief Executive of CPR, expressed her concerns about the withdrawal of their tax exemption status and the suspension of their FCRA license in February 2023.

“This latest decision to withdraw our tax exemption status, combined with the suspension of our FCRA (Foreign Contribution Regulation Act) license in February 2023, is a debilitating blow to an independent, highly regarded research institution that strikes at the core of its ability to function," Aiyar was quoted as saying by The Indian Express.

Aiyar also refuted claims that CPR engages in "activist" activities, stating that all collaborations and partnerships are solely focused on research work.

“All our collaborations and partnerships are limited to research work alone. There is absolutely no question of CPR being the voice of any collaborator, financer or partner,” said Aiyar.

“CPR’s voice is that of its vast array of scholars. There is also no one ‘CPR view’ but a diversity of perspectives, anchored in scholarly, credible research over the last 50 years," Aiyar added.

Following IT searches conducted at CPR's headquarters in New Delhi on 7 September 2022, the think tank has reportedly faced a period of uncertainty.

Due to the withdrawal of its FCRA license, the think tank faced a severe financial setback as a significant portion of its funding came from overseas donors.

As a result, the organisation had to downsize its staff and significantly reduce the number of events and programs it conducted.

The IT department also raised concerns about "discrepancies" in CPR's tax filings for the years 2017-2018 and 2021-2022, amounting to Rs 1.43 crore and Rs 81.45 lakh, respectively.

The IT department alleged that CPR had "mixed up" funds received under the FCRA provisions with its core funds.

In addition, the IT department also cited seven books the CPR had published and alleged that the think tank was “subsidizing” the authors but did not have any revenue from or hold ownership of the books.

These grounds, listed in the show-cause notice received by the CPR on 22 December 2022, are the very same for which it has lost its IT exemption under Section 12A of the Income Tax Act, The Indian Express reported.

In the show-cause notice, the Income Tax department had identified 19 employees of CPR, including a peon, as "non-filers" due to their irregular or non-existent tax returns.

This, incidentally, does not figure in the IT’s final order to CPR cancelling its tax exempt status.