Income-tax Act prevails over Canon Law; Salary received by Nuns/Missionaries is taxable

Last Updated On: Feb. 9, 2020, 2:13 p.m.

Union of India v. Society of Mary Immaculate (Tamil Nadu) – [2019] (Madras)

The Nuns, Sisters, Priests or Fathers were rendering services as Teachers in schools which received Grant-in-aid from the State Government under the Grant-in-Aid Schemes formulated by the State.

They have claimed that since they are bound by the Canon Law for their vows of poverty to the Christ, they cannot be taxed in respect of salary received from the State Government through respective school or educational institutions. The amount of salary is directly transferred to the individual Bank Account of the Teachers under ECS Scheme. Further, the salary in their hands entirely belongs to the Institution, Church or the Religion.

Taking such vows of poverty, etc., under their Canon Law, they are deemed to have suffered a civil death and renounced the world and therefore, they cannot be subjected to the deduction of tax at source as stipulated in Section 192 of the Income-tax Act, 1961.

The Madras High Court held that Section 192 has nothing to do with Religious leanings of Teachers who are paid salary by State in form of Grant-in-aid. It is immaterial whether they are Nuns, Sisters or Missionaries or normal persons serving as Teachers in Government Aided Schools, their religious character or bindings have no effect on uniform application of section 192.

Salary is paid under contract of employment with which Educational Institution or Church or Diocese who are not even privy to such contract of employment qua the State Government. Moreover, State Government as a Payer of salary under Income Tax Act is not bound by any Religious tenets or provisions of Canon Law. It has nothing to do with Religious freedom guaranteed under Articles 25 and 26 of Constitution of India.

Vows of poverty taken by Nuns and their surrender to Church or Diocese would not affect taxability of salary from State Govt. It is nature and character of receipt as salary at time of payment, which is important under the Act. Provisions of Income Tax Law are dry, plain and simple, a-political, non-religious in character. State Government, as a payer of salary under Income tax Act, is not bound by any religious tenets or provisions of Canon Law.

Therefore, neither Income Tax Department nor State Governments has anything to do with religious character of Institution and Teachers or Nuns or Missionaries and, therefore, they cannot take a stand of not making tax deduction at source in view of Canon Law.


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