New Delhi: Large educational institutions across the country, enjoying massive tax concessions, are now under the scanner of income tax sleuths after some of them were found to have duped the exchequer by over Rs.34 billion last fiscal, an official said on Tuesday.

Human resource development ministry officials said the government has laid down new tax guidelines for educational institutions and has asked for a closer scrutiny of tax returns submitted by large schools and other educational institutes.

Institutions with an annual income of Rs.500 million will be assessed by the income tax department.

A ministry official said many educational institutes have been indulging in tax evasion.

"These institutions will be scrutinised by the income tax department soon after the new academic session starts. The process has already begun," an official, speaking on condition of anonymity, told IANS.

According to government sources, the income tax department in its internal report for the last fiscal had pointed out that a number of institutions had indulged in huge tax evasions and duped the government by over Rs.34 billion.

According to of the Income Tax Act, 1961, income received by educational societies, which exist solely for educational purposes and not for the purpose of profit, shall not be subjected to tax as education is considered a "charitable act".

But tax officials contend that some institutions divert money and evade txes.

Moreover, educational institutions charge 'donations', levy capitation fee, other charges from candidates, which remain unaccounted, said officials.

"As the money collected through these means are not solely related to education and are diverted for commercial activities and private enterprises, it is high time to check such malpractices and fraud committed by these institutions," said an official.

The income tax department is also putting research institutions under the scanner to check misuse of tax benefits.

According to R.S. Mathoda, member of the Central Board of Direct Taxes, "this would make the institutions more accountable".

These institutions are given tax exemptions to the tune of 120 percent of the amount spent on research. According to Mathoda, there are cases where tax exemption given towards research facility is misused. IANS