Church leaders will appeal Indian Supreme Court order for tax on salaries of clergy

Bangalore, India, Nov 20, 2024 / 12:25 pm (CNA).

Catholic education officials and legal experts are vowing to appeal the Supreme Court of India’s recent ruling that ended a decades-old policy of zero income tax on the salaries of nuns and priests in government-aided Catholic educational institutions.

“This judgment without a detailed hearing of our plea is very disappointing. We have no option but to challenge this verdict,” Father Xavier Arulraj, the legal secretary of the Tamil Nadu Catholic Bishops’ Council, told CNA on Nov. 15.

The Nov. 7 ruling came after dozens of petitions, including more than 90 pleas by Catholic religious who sought to keep the policy in place in the southern states of Tamil Nadu and Kerala.

“I have been representing 78 congregations, institutions, and dioceses [from Tamil Nadu] before the Supreme Court,” Arulraj said. “We had hoped for a detailed hearing to explain our position but the court disposed of it without hearing us.”

Since 1944, Arulraj noted, the salaries of Catholic nuns and priests had been exempted from income tax as a recognition of their “service to the society.” The rule dates to the final years of colonial rule in India; the country gained independence from the British in 1947.

In 2015 in Tamil Nadu the exemption was removed and the salaries of religious were made taxable there.

Following an appeal by the Church, the Tamil Nadu High Court ruled in 2016 that priests and nuns should not be subject to income tax. The court argued that due to vows of poverty, the salaries could not be subject to income tax as the money is not accrued to them but only to the diocese or congregation.

Arulraj noted that in 2019 the high court reversed the order in favor of the government, forcing the Church to file an appeal in the Supreme Court.

Father Michael Pulickal, the secretary of the “Jagrata” (Vigilance) Commission of the Kerala Catholic Bishops’ Council, told CNA that the income tax department “initiated the process first in Kerala in 2014 for tax deduction from the salaries of Catholic nuns and priests.”

“But, on appeal by the Church, the court stay prevailed until 2021 when the Kerala High Court gave a final verdict that income tax could be collected from the Catholic religious. Then, we also moved the Supreme Court, pleading in the case with the Tamil Nadu appeals,” Pulickal said.

“The dismissal of the Catholic appeals without a detailed hearing is disappointing for those involved,” Romy Chacko, a Catholic lawyer at the Supreme Court, told CNA. He also serves as a designated lawyer for the Kerala Forum of Catholic Religious.

“The higher judiciary may not always hear each appeal in detail. Since the Supreme Court has not given any reason for dismissal of the appeals, review petition is an option available before the Church now,” Chacko said.

“This is not a problem for Kerala and Tamil Nadu alone. Since the Supreme Court has given a verdict, taxation could be applied to any state in the country,” Father Teles Fernandes, the secretary of the Gujarat Board of Catholic Educational Institutions, told CNA.

“Everyone needs to be on the alert,” Fernandez said.

“We have only 57 aided schools in Gujarat with less than 1% Christians among the population of 64 million of the state,” he continued.

“But the government has already stayed our right to make appointments of staff and principals in the schools,” he added.