Express View on CPR losing its tax exemptions: Think tanked

Source: The post is based on the article “Express View on CPR losing its tax exemptions: Think tanked” published in The Indian Express on 7^th July 2023.

Syllabus: GS 2 – The Role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders

Relevance: concerns associated with the Centre for Policy Research (CPR)

News: The Centre for Policy Research (CPR), a prominent think tank has faced scrutiny from state agencies.

What steps has the government taken against the CPR?

A few months ago, the Ministry of Home Affairs cancelled CPR’s FCRA (Foreign Contribution Regulation Act) registration. Now, the Income Tax department has cancelled CPR’s tax exemption status, which it has held since 1976. 

These decisions have been taken after a show cause notice was issued by the IT department in December last year. The notice stated that CPR was engaging in activities that were not in line with its registered objectives and conditions.

Must Read: Power against knowledge: On Centre for Policy Research FCRA licence suspension

What were the activities CPR was involved in?

In September last year, the IT department conducted surveys on the CPR regarding alleged tax discrepancies.

The IT department identified certain violations, including CPR’s involvement in the Hasdeo movement against coal mining in Chhattisgarh forests.

The investigation team of the IT department has also red-flagged funds provided by CPR to Jana Abhivyakti Samajik Vikas Sanstha, an organisation involved in the preservation of the environment.

The IT department claimed that funds were used to address issues related to litigation, mobilization of people, and funding for the Hasdeo movement, which falls outside CPR’s stated mandate.

What can be the implication of the measures taken by the government against CPR?

The CPR has worked on areas from analysing election data to evaluating the government’s flagship programmes such as PM Poshan.

This researched analysis contributes to policy debates and helps both state and non-state agencies to improve their decision-making processes.

Further, it is also difficult to expect the state planning boards or Niti Aayog to fill this task of both making and auditing public policy as well as do broad analysis of political and social trends.

Hence, many governments rely on think tanks to build capacities in decision-making. These think tanks in turn rely on donors.

Hence, disrupting the flow of funds to think tanks can severely impact their activities, potentially leading to their closure.

What can be the way ahead?

While CPR needs to address questions raised by the tax authorities, cancelling its tax exemption status, which is a key to its funding, is seen as an example of excessive regulation.

It also raises concerns about returning to the era of the license permit inspector raj.

Further, tax inspectors may succeed in forcing institutions to conform with the government’s goals and priorities. However, this approach will hurt policymaking and restrict the range of ideas that policymakers may discuss and debate.