The Supreme Court of India has agreed to delve into a crucial legal matter surrounding the entitlement of income tax exemption for nuns and priests engaged as teachers in government-aided Christian missionary schools. The decision by a bench comprising Chief Justice D Y Chandrachud Justices JB Pardiwala and Manoj Misra comes in response to the urgent pleas submitted by several dioceses and congregations from Tamil Nadu and Kerala.

Senior advocate Arvind Datar presented the submissions, highlighting the pressing need for an expeditious hearing on the matter. The primary question before the court revolves around whether the income earned by nuns and priests in their capacity as teachers can be subjected to income tax.

The genesis of this legal challenge dates back to December 2014 when the Income Tax department issued directives to educational authorities, instructing them to implement Tax Deducted at Source (TDS) from individuals employed as teachers. Subsequently, nearly 100 dioceses and congregations from Tamil Nadu and Kerala sought legal recourse in the high courts, only to find their challenges dismissed.

The crux of the plea argues that the income generated by nuns and priests becomes the revenue of the congregation responsible for running the school. It asserts that these teachers do not personally acquire the money paid as salaries. The high courts in Madras and Kerala, however, rejected these pleas for income tax exemption.

The petitioners contend that government-aided missionary schools enjoyed income tax exemption from 1944 until the Union government decided to implement tax deduction at source in 2014. This change in policy prompted the Income Tax department to request TDS from teachers, leading to the present legal battle.