Don't look a gift horse in its mouth is an old hat. But the one who gifts can always ask anxious questions about the end use of his donations as well as the tax benefits promised to him. It is equally true that charity needs to be properly channelized so as to reach the target beneficiaries. Red Cross has made for itself a formidable reputation for getting into the act with dispatch wherever a disaster strikes. Back home in India people trust committed and resourceful professional charitable organisations like Ramakrishna Mission more than governmental agencies when it comes to donating for an altruistic cause. But this article is focused on the role of donation aggregators.
Paytm and a few other mobile wallet companies have swung into action to mobilise funds for the beleaguered people of Kerala devastated by heavy rains. The ease of collection is definitely in their favor with tailor-made software enabling donations with a touch of the screen at the right spot. A Paytm account holder can donate to the Chief Minister's Distress Relief Fund Kerala (CMDRF) by touching the 500/1000/2000 box. Social media is full of homilies for the common folks---donate a small sliver of what you splurge, is its refrain. But many right-thinking people are also asking---Is Rs 500 a small sliver of an average splurge? It is not for the charity/donation aggregator to say how much one must donate. Restricting donations to one of the three amounts might make for ease of collection and accounting but that makes it beyond the reach of the poor who otherwise might want to contribute their mite to the suffering masses of Kerala.
Initially, Paytm expressed its inability to issue receipts that would pass muster under section 80G of the Income-tax Act 1961 for claiming deduction from one's gross total income. That honor is reserved for charitable institutions that get themselves approved by the Commissioner of Income tax. Obviously Paytm would not like to get enmeshed in the nitty-gritty of rehabilitation which is admittedly not its cup of tea.
But later on, all the mobile wallet platforms seem to have softened their stand and agreed to issue receipts which in turn can be produced to CMDRF for getting yet another receipt, the one that would pass muster under section 80G for claiming deduction by donors. This is a put-off for a donor with an eye on 80G benefit because he would be at the tender mercies of CMDRF which obviously would be chary of such vicarious donors.
Since Paytm would be handing over a lump sum for the donations collected in bits and pieces, reconciliation would be insisted upon before receipts can be issued to such vicarious donors. Paytm should take it upon itself this arduous task instead of asking the vicarious donors to fend for themselves, cringing and craving before the CMDRF bureaucracy. To be sure, Paytm has through its blog exhorted donors vide its platform to seek authentic receipts by logging onto https://donation.cmdrf.kerala.gov.in/ but it won't be as simple as made out to be.
Unless a donor is able to establish a back-to-back relationship with his own small donation to Paytm and the lump sum donation made by the mobile wallet on behalf of a whopping 12 lakh donors aggregating to Rs 30 crore till the time the above blog was posted, 80G seeking donors could be left high and dry.
Incidentally, CMDRF has advertised its account number with State Bank of India along with its IFSC and SWIFT codes into which NEFT transfers can be easily made and an online receipt obtained -- the back-to-back printout of which would pass muster under section 80G. While a mobile wallet is useful in establishments for those who are loath to carry their cards, swipe them and authorise the payment with their ATM PIN, donations triggered as much by noble motives as by the lure of tax benefits would be advisedly better made through net banking.
In the event, the mobile wallet companies' initiative, commendable as it is, might find favor only with non-taxpayers. For good measure, Paytm has promised to make a matching contribution up to Rs 1 crore. Thus, if it manages to collect say Rs 50 lakh through its Kerala window, it would present CMDRF with a cheque of Rs 1 crore---0.50 crore from its account holders and 0.50 its own. If it manages to collect Rs 5 crore, it would handover only Rs 6 crore---5 crore of account holders and 1 crore of its own.
Two legitimate questions arise in this regard: 1) Will there be an audit of funds collected vis-Ã -vis the funds handed over to CMDRF? 2) Will CMDRF get itself embroiled in the messy distinction between own and vicarious donations made by Paytm?
(The author is a senior columnist and tweets @smurlidharan)