Friday, July 11, 2014

Budget, CSR and NGOs



The new Finance Bill brings much desired clarity for CSR expenditure. This expenditure will not be allowed as a business deduction under section 37 of Income Tax Act.

This has a (counter-intuitively!) positive implication for NGOs. Companies looking for some tax advantage for their CSR spend will now be interested in donating to NGOs. This will help them get at least 50% deduction under sec. 80G.

And if the NGO is approved under sec. 35AC? The company can claim 100% deduction from taxable income!

Talk about having your cake and eating it too!!

References:

- Finance Bill 2014, proposed modification to sec. 37

- Sec. 135 of Companies Act 2013

- CSR Rules 2014



(11-July-2014)

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