The current reading of law is that these donations are part of gifts, which are in the nature of fringe benefits, Ved Jain, member of the central council of the Institute of Chartered Accountants of India said at a seminar in New Delhi.
However, they are likely to be exempted from FBT since taxing them would hamper the functioning of NGOs and charitable institutes, he said.
The finance ministry is yet to come out with a circular on FBT, clarifying various provisions. Two months after the circular, ICAI would bring a guidance note on it, Jain said.
He said FBT would fetch around Rs 9,000 crore (Rs 90 billion) to the government exchequer this fiscal. It has already collected Rs 583 crore (RS 5.83 billion) from FBT during the first quarter of this fiscal.
Jain said imposition of FBT would encourage the unhealthy practice among top management of companies to reduce their tax liability.
The top management of companies would now restructure their income in such a way that more and more of it comes under fringe benefit, which will be paid by the company and not by them in individual capacity.