Tata Faces $1.7 Billion Liability as Tax Cover Lost

By Pratik Parija

Tata Trusts, a philanthropic organization associated with India’s salt-to-software Tata group, faces a tax liability of about 120 billion rupees ($1.7 billion) after authorities canceled exemptions to six of its entities, the Business Standard newspaper reported.

A trust whose registration is canceled is required to pay tax on its past exempted income, the newspaper said, citing an official it didn’t identify. The trusts, however, said in a statement Friday that it hadn’t received any demand notice from the income tax department.

The cancellation should take effect from 2015, when the registrations were surrendered and the Trusts itself consented to the move, according to a statement from Tata.

The Trusts' six entities that lost their registrations are Jamsetji Tata Trust, R.D. Tata Trust, Tata Education Trust, Tata Social Welfare Trust, Sarvajanik Seva Trust, and Navajbai Ratan Tata Trust. The order does not affect Sir Dorabji Tata Trust and Sir Ratan Tata Trust, the biggest under the umbrella of Tata Trusts -- a cluster of charitable organizations controlling 66% of Tata Sons, the holding company of the group.

Tata said it has effective legal options to vindicate its grievances against the tax department order.