The Kerala High Court on Thursday upheld a circular of the Income Tax Department instructing to deduct TDS from the salary being paid to priests and nuns working as teachers in aided educational institutions in the State. Justice A.K. Jayasankaran Nambiar, while dismissing a batch of writ petitions challenging the action of the Central Board of Direct Taxes, observed that the members of religious congregations who were working or retired from the educational institutions were receiving salary and pension in their individual capacity and based on educational qualification and skills possessed by them as individuals.

So, the right to receive salary or pension was accrued to them as individuals and not to the religious congregation.

They had contended that the salary or pension received by members of religious congregations could not be taxed as the congregation had been entrusted with receiving their salary or pension.

The court added that the precepts of canon law might require them to entrust the amount received as salary or pension to their religious congregations. But, this obligation , which was only an obligation based on their personal law, would not cloth the congregation with a legal right to receive salary or pension directly from the government or employer and without involving the members.

Therefore, the amount received by the members of the congregations would tantamount to an “application of income” and would not be a “diversion of income by way of overriding title”.

TDS to be deducted from salary of priests, nuns who teach in aided institutions