Salaries of nuns & priests as teachers taxable, says SC

NEW DELHI: Supreme Court Friday said there is nothing wrong in income tax department deducting tax (TDS) from salaries paid to nuns and priests working as teachers in govt-aided Christian missionary schools even if they have taken a vow of poverty.

Dismissing the appeals filed by nearly 100 dioceses and congregations from Tamil Nadu and Kerala, a bench of CJI D Y Chandrachud, and Justices J B Pardiwala and Manoj Misra said whether or not they have taken vow of poverty, the salaries are given from govt grants and once there is a income, there has to be a tax.

Appearing for the dioceses, senior advocates Arvind Datar and S Muralidhar said incomes of nuns and priests become income of the congregation which runs the school and that these teachers personally do not acquire the money paid as salaries.

If a nun or a priest dies in an accident, the compensation money also goes to the parish and not to relatives of the deceased, Datar said, explaining that this is so because they sever their relationship with their families and relatives after taking the vow. The petitioners explained that the salaries of nuns and priests get transferred to the congregation or diocese running the school, and the congregation submits returns wherever necessary. The appeals had challenged the decisions of Madurai bench of Madras HC which had rejected their plea for exemption from I-T, a relief enjoyed by aided missionary schools since 1944 for 70 years till Centre decided to impose tax deduction at source in Dec 2014.

One of the petitioners said, "To become a 'nun' and member of a congregation, a candidate must undergo rigorous training and at the final stage she must take three sacred vows - of obedience, chastity and poverty. Once a candidate becomes a member of a congregation, she cannot own any property and cannot have any income of her own... These sisters dedicate themselves as servants of God and spend their lives for charitable purposes and services like education, health, rehabilitation of the poor, orphans and destitutes. They live in abstinence by leading an ascetic life."

The 1944 Central Board of Direct Taxation (CBDT) circular had said, "No I-T should be levied on fees received by missionaries for services rendered by them, which by conditions of their service and rules of their society, they are required to make over to the society." A 1977 circular had echoed this. However, in Dec 2014, I-T department instructed state educational authorities to effect TDS from members of all religious congregations receiving salaries from govt.