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In a major crackdown on the Rotary International South Asia Office (RISAO) and the Rotary Foundation of India (RFI), India’s Goods and Services Tax (GST) department has alleged tax evasion totalling over Rs 170 crore across four separate show cause notices.
The controversy, triggered by a complaint from KM Alexander – a lawyer and former vice president of the Rotary Club, Thiruvananthapuram – has sparked scrutiny of RISAO’s financial dealings, and raised questions about possible violations of the Foreign Contribution Regulation Act (FCRA).
Alexander now vows to escalate the matter to the Central Bureau of Investigation (CBI), calling the revelations “the tip of the iceberg” in the alleged corruption within the Rotary network. According to him, “The GST notice itself mentions possible FCRA violations. This calls for a deeper investigation. I will continue pursuing my complaint.”
On June 28 this year, the Directorate General of GST Intelligence (DGGI), Kochi zonal unit, issued three show-cause notices to the RFI. Two days later, on June 30, the DGGI issued a notice to RISAO. The notices, signed by the joint director of DGGI Sreejith M, detailed alleged tax evasion running into several crores across different streams of RFI’s activities.
RFI, an associate foundation of The Rotary Foundation (TRF) USA, was registered in India in 1988 under the Societies Registration Act, 1860. RISAO acts as Rotary International (RI) USA’s ground arm in South Asia, collecting dues from individual clubs and providing essential administrative services under RI’s guidance.
Members pay USD 75 (approx. Rs 6,250) annually as per capita dues, used for administrative expenses and RI-approved club grants, while donations are separately managed. Instead of transferring these dues to RI USA, RISAO uses them to perform licensed administrative functions in the region.
India alone is home to more than 40 Rotary districts managing approximately 4,700 clubs, with a membership strength of about 1.7 lakh — nearly 14% of Rotary’s total global membership.
Before issuing notices to RISAO and RFI, the GST department held inspections at their New Delhi office in November 2024 and April 2025.
One of the notices alleged that RFI evaded Rs 38.82 crore in GST by treating high-value donor contributions for Arch Klumph Society (AKS) memberships as pure donations, despite offering structured privileges and services in return.
The Directorate General of GST Intelligence found that between 2018‑19 and 2023‑24, RFI collected large sums from individuals for memberships in the elite AKS. However, RFI allegedly failed to register under GST or pay tax on these collections.
Donors are recognised as AKS members for contributions of USD 250,000 or more. AKS members receive exclusive benefits such as portraits displayed at Rotary headquarters, ceremonial inductions, exclusive newsletters, VIP access at international conventions, and networking opportunities with senior leaders.
Such benefits, the GST department alleges, are tangible and intangible returns to the donor, turning the donation into a quid pro quo arrangement rather than pure philanthropy.
“The entire arrangement therefore appears to fit to the definition of a "supply" under Section 7(1)(a) of the CGST Act, 2017, wherein goods or services exchanged for a consideration during the course or furtherance of business are deemed taxable,” the GST notice said.
The foundation has assured GST officials that they will submit details of Indian AKS members and their donation history from April 2018 to November 2024.
“Legally and on paper, RISAO and RFI are two separate organisations. However, they operate from the same office, share staff, and use the same floor space. They present themselves as distinct entities and portray RI as a charitable organisation,” a GST officer told TNM.
The second notice alleged that RFI evaded Rs 20.78 crore in GST by charging “administrative fees” on corporate social responsibility (CSR) funds routed through its accounts for project implementation.
According to the notice, several companies approached local Rotary clubs for CSR initiatives and received brochures detailing project options. Funds were then deposited directly into RFI’s bank accounts and recorded at its New Delhi office. A memorandum of understanding (MoU) was signed with each company, after which projects were carried out through Rotary districts or clubs, depending on the company’s chosen focus areas.
“RFI was deducting a margin towards administrative charges from the funds received from the companies and the balance amounts were spent through a dedicated account managed by the host club for that particular initiative. In some cases, project implementing clubs were also contributing towards the administration charges. These charges vary between 0% to 5% depending on the corpus of the CSR fund,” the show-cause notice signed by Sreejith M states.
In the third notice, RFI is alleged to have evaded GST amounting to Rs 14.38 crore (Rs 7.19 crore in CGST and Rs 7.19 crore in SGST) during the period of investigation.
The notice states that large sums were transferred from RISAO to RFI but recorded as “donations” in RISAO’s accounts. These funds were, in reality, mandatory dues collected from Rotary clubs in India, intended to be remitted to Rotary International, USA, as administrative charges under RI’s rules. Instead, under RI USA’s directions, RISAO diverted the money to RFI, concealing the true nature of the funds — a move described as an attempt to avoid GST.
The notice also highlights, “The financial arrangement between RI and RISAO raises serious concerns under the Foreign Contribution (Regulation) Act, 2010.”
According to the notice, between FY 2018-19 and 2023-24, RISAO collected about Rs 534 crore, but instead of remitting these funds abroad, it retained them in India — diverting Rs 94 crore to RFI and directly disbursing Rs 129 crore in grants to clubs since FY 2021-22. This rerouting of funds appears aimed at avoiding FCRA restrictions and GST on foreign remittances.
Alexander is approaching the CBI seeking a probe into FCRA violations with the findings of the GST department in this third notice.
“They claim the money was sent abroad, but in reality, it was retained. Yet, their accounts reflect that the funds were transferred and later donated back,” the GST officer said.
RISAO has been importing services from RI USA for its functioning in India, which qualifies as a taxable supply and is liable to pay GST under the reverse charge mechanism. The department alleges this has led to suppression of imported service value and evasion of IGST amounting to Rs 96.11 crore, which is now expected to be paid along with interest and penalty.
“It appears that RISAO has suppressed the value of imported services amounting to Rs 533.97 crore for the period from April 2018 to March 2024, thereby evading IGST of Rs 96.11 crore, which is liable to be demanded and recovered along with applicable interest and penalty under the relevant provisions of the CGST and IGST Acts, 2017,” the notice says.
In their response to TNM, the RFI confirmed that it has received show-cause notices from the GST department. The foundation said the notices have been challenged before the Delhi High Court, which has granted an interim stay on their adjudication.
RFI maintained that it “operates with the highest standards of integrity, accountability, and transparency,” and emphasised its continued cooperation with authorities. “We respect the judicial process and are cooperating fully with the authorities. As the matter is sub judice, we are not advised to comment on specifics,” the foundation added.