Concerns Regarding Amendments in the Financial Bill 2023 Impacting Religions in India – Jainacharya Yugbhushansuriji to Nirmala Sitharaman

Concerns Regarding
Amendments in the
Financial Bill 2023
Impacting Religions in India

Dharmalabh,

Recently on 1st Feb 2023, few amendments were proposed in Finance Bill 2023 which were regarding
taxation on trusts. I am sure you would’ve received numerous representations opposing these
amendments pointing at how these changes would adversely impact Indian religions and their
activities. Usually, any bill that needs to be passed is discussed upon and debated in the Lok Sabha;
sadly, I have learned that despite these objections, the Finance Bill was passed by the Lok Sabha
without any debate and discussions.

I have had the opportunity to review several representations that have brought to light the concrete,
detrimental effects that would befall religious trusts if inter-trust transfers were partly disallowed as
application of income, as is currently being proposed. These representations have also emphasised the
numerous other negative consequences that could result from other proposed amendments, leaving
religions in India in a precarious position.

Rather than dwelling on the negative implications arising out of these amendments, I want to delve
into the underlying causes that have paved the way for such issues. I will first explore the ancient
norms governing the relationship between the king (state) and religions, the benefits of it and the ill
effects in absence of them. Secondly, I will specifically focus on the potential impact of these proposed
amendments on the Jain religion and adherence to the sacred commandments of its scriptures. And lastly, I will examine how these changes could violate the fundamental rights enshrined in the Indian
constitution for both individuals and denominations (religious groups).

India has been a mother of all oriental religions. Here they were born, thrived and blossomed over the
centuries. They have woven themselves into the very fabric of society, becoming an inseparable part
of people’s lives. In fact, they are like the life-force of the country, providing sustenance and strength
in the face of numerous challenges and threats to its civilisation. As a result, religions have enjoyed a
special position in India, being treated as sovereign entities that the state never meddled with or
imposed taxes upon. This unique relationship between religion and state has allowed them to flourish
and contribute to the rich civilisational tapestry of India.

Great Indian and foreign scholar attests to the said prevalent norms. The great Indian political thinkerChanakya has quite unambiguously propounded that, no tax can be imposed by king to any property
of religion or to any person whose activity is to promote religion¹. The vestige of this norm is visible
even today in the form of clauses of Income Tax Act which grants exemption of taxes to trusts. A
Cambridge University book on history of India recorded that, no land could be assessed for taxation
which belongs to temples/ascetics². Though undoubtedly taxation is a sovereign function, levying
taxes was and continuous to be the prerogative of a sovereign state³ but Chapter 7 of Manusmriti
states that the King should be guarantor of security to religion and yet he cannot tax religions. The
Native Kings believed that the religions and their sages provide a lot, in both temporal and spiritual
planes, to society and the State, and considered them independent of the temporal sphere.⁴

¹ ऋत्विगाचार्यपुरोहितश्रोत्रियेम्यों ब्रहमदेयान्यदण्डकराण्यभिरु पदायकानि प्रयच्छेत् । Quotation in Kautilya’s Arthshashtra, CH-2.1;
नेच्छेत् स्वाम्यं तु देवेषु गोषु च ब्राह्मणेषु च। महानथर्करं ह्येतत् समग्रकुलनाशनम् ।। २२४ ।। Quotation in Kautilya’s Arthshastra, CH-3.224
² Empires: Perspectives from Archaeology and History.(2001). United Kingdom: Cambridge University Press. Pg 177, https://www.google.co.in/books/edition/Empires/MBuPx1rdGYIChl=en&gbpv=1&pg=PA177&printsec=frontcover
³ Manu Smriti, CH-7, V-133 & 136, https://www.wisdomlib.org/hinduism/book/manusmriti-with-the-commentary-of-medhatithi/d/doc200659.html
⁴ The Great poet Kalidas in his Abhijnana Sakuntalam, refers to the utterances of ancient Sages which reflect universal practice of native rulers, through following conversation between Dushmanta and Madhavya :-
“Madhavya. Say, you have come for the sixth part of the grain which they owe you for tribute.
“King. No, no, foolish man, these hermits pay me a very different kind of tribute which I value more than heaps of gold or jewels; observe the tribute which
my other subjects bring,
Must moulder into dust; but only holy men
Present me with a portion of the fruits Of penitential service and prayer,
A precious and unperishable gift.”
https://pdfslide.net/documents/abhigyan-shakuntalam-of-kalidasa-tr-monier-williams.html?page=65

These were the prevalent standards that cultivated an environment that is conducive to the unfettered
flourishing of religion in a secure manner. The separation and independence of both domains ensured
due to theses standards has been critical in achieving the aforesaid goal. This norm was also prevalent
in the West since ancient times and even today this is evident in many Western countries.

However, in modern times, with the state extending its jurisdiction into the realm of religion, it has led
to a flood of issues, like the recent amendments, being unleashed on religion, something that runs
counter to the very ethos of Indian traditions. This is the root cause of all the issues concerning the
religions of India.

Furthermore, with regards to the Jain religion (Sangh), it has its own unique system of governance
called as Jinshashan. When it comes to Dharma Dravya (Religious wealth) management, the Jain
scriptures have established a robust and fail-safe system that has been in place since the time
Tirthankar Mahavir established Jinshashan. The entire Jain Sangh adheres to this system with discipline
and in fact, it is mandatory as per the Jain scripture to follow it. The current amendment raises the
possibility to pay taxes due to inter-trust transfers results in breaching of the scriptural
commandments of Jain scriptures as it would amount to diversion of funds for the purpose other
than what it was raised for.

(Note: In Jainism, donations are typically linked to a specific purpose, and the Dharma Dravya
managers are bound to use that for the same purpose i.e., as per the wish of the donor. Tenets of
Jainism absolutely recognises and mandates to practice this right of the donors. In fact to protect this
right the Cy-pres clauses of Bombay Public Trust Act were striked down by Supreme Court in Ratilal
Panachand Case).

Like any other religion, Jain Sangh is a unified, indivisible and one entity that is present worldwide i.e.,
it isn’t fragmented w.r.t places, temporal jurisdictions, temporal legal framework. This means that any
Dharma Dravya held by a local temple or trust is, in fact, the property of the entire Jain Sangh. The
local Sangh acts as a caretaker of these Dharma Dravya on behalf of the entire Jain Sangh. As a result,
Dharma Dravya belonging to one temple can be used for the same purpose in another temple.

Jain Sangh frequently faces imbalance of funds wherein a particular place may have scanty donations for a particular purpose which maybe in abundance at some other place. Hence, the practice of
inter-temple and inter-trust transfers is a permitted regular feature within Jain Sangh. However, the
recent amendment is an attack on this practice and will restraint such transfers. This restraint will
disrupt the balancing in inequality of funds across different regions. It will also jeopardise the
sustainability of the religion in economically weaker areas. If these transfers still occur, it will risk in the
diversion of funds equal to the amount of additional taxes if levied and paid due to such transfers. This
will further worsen the situation which is already marred by double taxation.

The introduction of trust acts caused a significant change in the religious landscape, leading to
fragmentation of unified religion into multiple trusts. As a result, the Dharma Dravya managers of one
temple who were answerable to the entire undivided Sangh are now rendered autonomous and
independent without any accountability to the entire undivided Sangh. Legally they are now only
bound to adhere the provisions of trust deeds and relevant act, being reportable to their members and
relevant statutory authority only. Despite this, inter-operability among trusts has been allowed and was
possible as funds could be transferred without any negative implications. But the recent amendment
threatens to remove even this vestige of oneness of Sangh.

In addition to violating Indian traditions, these amendments also infringe upon the fundamental rights
that are guaranteed to individuals and denominations by the Indian Constitution. Firstly, they breach
the right guaranteed by Article 26, which allows denominations to manage their religious affairs.
Secondly, for the Jains, managing funds of the religion is considered a highly revered matter of
religion, and managing them according to the scriptures is an essential religious practice.

Both rights are being violated by the proposed amendments as (1) it will place restraint in their way of
managing their Dharma Dravya (i.e. matter of religion) as it will be an interference of the state in
managing their funds. (2) It will also amount to hindrance in practising essential religious practices (i.e.,
managing funds as per their scriptural commandments), if the additional tax levied due to the transfer
of funds would lead to diversion of funds for purposes other than what it was raised which is a breach
of scriptural belief.

Further, the proposed amendments impose a harsh penalty on trusts for not submitting their tax
returns on time, which is disproportionately severe. Essentially, the modifications will result in trusts losing their tax exemption status if they fail to file their returns on time, even if it’s only a day late. This
is unequal treatment because other taxpayers who file late are usually only subjected to a fine and lose
some auxiliary benefits, while trusts risk losing their crucial and primary benefit, i.e. income tax
exemption, due to missing the deadline by even one day. This is a clear example of unjust and
inequitable treatment.

These are several issues that merit consideration with regards to the current amendments which needs
to be addressed to ensure safeguarding of the religions in India. As religions are a major source of
soft power for India, taking positive steps in this direction would greatly contribute to fulfilling
India’s aspiration of being a ‘Vishwa-Guru’.

Dharmalaabh