Opinion and commentary

Do people donate money to charity to get a tax rebate? The answer for most donors is ‘no’. They donate because they believe in the causes they support, or the quality of work that some NGOs are doing, or because they are committed citizens. Why then are tax incentives needed for the charity sector? Why should the government forgo revenue it can generate from taxing charitable donations? Do tax incentives have any impact on charitable donations? We don’t know the answer to the last question, as a study on tax incentives across 12 countries, including India, by the Centre for Social Impact and Philanthropy (CSIP) at Ashoka University, in research partnership with the Centre for Budget and Governance Accountability, highlights. This is because the impact of tax incentives on charitable donations has not been systematically studied in the Indian context. The only publicly accessible study uses data from the 1970s-80s, when tax incentives for philanthropy were more appealing than they are now because the overall tax rates were much higher.