The Nov. 7 order of the three-judge bench of Chief Justice D. Y. Chandrachud, Justices J B Pardiwala, and Manoj Misra dismissed 93 appeals against a 2014 order of the Income Tax Department that asked them to pay taxes.
The practice was introduced in 1944 during the British colonial era as part of an effort to promote education across the country.
The Income Tax Department, which reports to the federal government, directed state governments in 2014 to deduct tax at source before paying salaries to priests, brothers, and nuns.
The Church challenged the order in high courts of the southern states of Kerala and Tamil Nadu.
The state courts upheld the tax department's order, and appeals were filed before the Supreme Court.
The counsels for the Church personnel argued that religious priests and nuns take a vow of poverty, and their salaries are transferred to their respective congregations’ accounts. Unlike other citizens, they do not individually own anything.
The country’s top court, in an interim order, temporarily relieved Church personnel.
However, in its final verdict, the court wondered how religious people's vows of poverty or not owning personal property affected the taxability of their income. It asked the government to deduct tax at the source of paying salaries.
The Supreme Court also stressed the need for a uniform application of law and held that any person employed and receiving a salary would be subject to taxation.
“We have learned about the court order from the media and are yet to get a copy,” said Father Maria Charles, secretary of the Catholic Bishops’ education body.
“I will be able to officially comment on the order only after reading it,” the priest told UCA News on Nov. 8.
The Church in India runs more than 50,000 educational institutions, including schools and 400 colleges, six universities, and six medical schools.