The University of Madras may face a complete blackout today, Monday, February 12 without power supply if it fails to pay its electricity bill due of Rs 80 lakh by that date by clearing the hold placed on its 37 bank accounts by the Tamil Nadu Income Tax (I-T) department. The income tax department has put a hold on the bank accounts over alleged nonpayment of Rs 424 crore tax dues, stated a report in The New Indian Express.
As per rule, if an institution receives more than 51% of its revenue as grants from the state or central government, it is treated as a government institution and is exempted from paying income tax. However, due to thousands of audit objections, the university has not received grants from the Tamil Nadu government since 2017. Because of this, the I-T department is considering the university as a private institution and has levied a tax of Rs 424 crore on it from 2017-18 to 2020-21.
"We spoke to income tax officials but they are asking us to deposit at least Rs 20 crore immediately to remove the hold on bank accounts. We are not in a position to do that," an official of the university told The New Indian Express on Sunday, February 11.
"After our 37 bank accounts were put on hold by the I-T department, over a dozen cheques issued by the university over the last three days under different heads have bounced. If we don't pay the electricity bills by Monday, our power lines may be disconnected. Our classrooms and hostels could turn dark and we may not even be able to carry out our routine work,” university sources said.
Direct impact on students
Apart from employees and pensioners, whose salaries and pension payments are under threat, students will be adversely affected as the university will not be able to clear the fellowship and scholarship dues. On average, the university needs at least Rs 18 crore, including Rs 7 crore for salary and Rs 8 crore for pension, per month to manage its recurring expenses. Officials are worried that the 166-year-old institution, which produced six former presidents and two Nobel Laureates, could come to a complete standstill if the issue is not resolved on a priority basis.
According to sources, apart from freezing the university's 37 fixed deposit and bank accounts maintained with the State Bank of India, Chepauk branch, the I-T department has also put on hold the accounts of the university with Tamil Nadu Power Finance and Infrastructure Development Corporation. Corpus fund, endowment funds, donations, and earnings from other sources of the university were deposited into these accounts.
The I-T department's action came as a bolt from the blue for the university which was already in acute financial crisis and struggling to manage its day-to-day expenses. "Despite severe financial constraints, we were somehow running the show through other sources of income such as earnings of Institute of Distance Education (IDE), interests from endowment fund deposits, and contributory pension scheme deposits. But after freezing the accounts, the university operations have come to a standstill. And what is worse is that there is no immediate solution in sight for the problem," a professor at the university said.
Continuous neglect?
According to a few professors and former vice-chancellors, the situation has arisen due to continuous neglect of state governments over the years and rampant corruption by those in power.
"There are over 4,000 audit objections with respect to the university accounts and in the last four to five years, the varsity has managed to reduce it to 1,900. Still there are several major objections related to irregularities in appointments and irregularity in the fixation of salaries which will take years for rectification. We may not be able to get grants from the state government till then," said a source in the university. Interestingly, the university which is struggling to deal with thousands of audit objections doesn’t have a full-time auditor due to a paucity of funds.
"An officer in the rank of joint secretary or deputy secretary from the finance department of the state government is appointed as the finance officer of the university to look after the financial affairs. But over the last 10 years, the university has seen over four officers and the job has not been done properly," a professor said.
