Tata's 130-year-old foreign education fund gets relief as I-T tribunal reinstates its tax-exemption status

The Income Tax Appellate Tribunal (ITAT) on Tuesday ruled that the JN Tata Endowment (JNTE) for higher education abroad will continue to enjoy income-tax exemption, despite offering loan-scholarships for Indian students to study overseas, reported TOI.

Founded in 1892 by Tata Group founder Jamsetji Tata, JNTE annually selects 90 to 100 students for merit-based loan scholarships. The scholarships span various disciplines, including applied sciences, management, and the arts, allowing students to pursue their studies outside India.

As per JNTE’s official policy, scholars sign a seven-year agreement with the foundation, repaying the loan in five equal instalments between the third and seventh year. JNTE currently manages a corpus of Rs 200 crore.


In its 2011 income-tax filing, JNTE declared no taxable income due to its tax-exempt status. However, an I-T officer argued that to qualify for tax exemption, the "application of income" and "charitable purpose" must be confined within India. Since the students pursued education abroad, the officer deemed the Rs 4 crore granted for scholarships non-exempt.

Further, the officer added that education promoting international welfare, in which India is interested, requires approval from the Central Board of Direct Taxes for tax exemption.

Although JNTE initially faced penalties for allegedly filing inaccurate returns, the ITAT ruled in favor of the endowment. The tribunal held that scholarships awarded to Indian students in India, even for education abroad, meet the legal criteria for income application within the country.

(With inputs from TOI)