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INDIA: CERTAIN CSR WORKS ELIGIBLE FOR TAX BENEFITS

The Indian government today said certain social welfare spending activities by corporates would be eligible for tax benefits but maintained that all CSR works cannot be given the same treatment.

Under the new Companies Act, certain class of profitable entities are required to shell out at least two per cent of their three-year average annual net profit towards Corporate Social Responsibility (CSR) activities.

Punit Shah, co-head of tax, KPMG, released: “If the CSR expenditure is covered by the specific sections (Section 30 to 36) of the I-T Act, repairs, depreciation, expenditure on a wide variety of notified projects including skill development projects, would be allowed under those sections. Accordingly, if the company constructs a vocational training centre as a CSR project, then repairs, depreciation (at 10%) insurance, or interest on borrowings taken to construct such building will now be expressly allowed as deduction.”

“The latest draft of DTC issued in April 2014 had said CSR is an appropriation of the profits of a company and, hence, not an allowable deduction. These fears have come true. It would be interesting to see whether this will propel corporates to contribute to notified charitable institutions and claim 50% deduction under section 80-G," says Sudhir Kapadia, National Tax Leader, EY. Under section 80-G of the I-T Act, the donation is deductible from the taxable income, either in full or to the extent of 50% of the amount.

 

The gLAWcal Team

LIBEAC project

Friday, 11 July 2014

(Source: Times of India)

This news has been realized by gLAWcal—Global Law Initiatives for Sustainable Development in collaboration with the University Institute of European Studies (IUSE) in Turin, Italy and the University of Piemonte Orientale, Novara, Italy which are both beneficiaries of the European Union Research Executive Agency IRSES Project “Liberalism in Between Europe And China” (LIBEAC) coordinated by Aix-Marseille University (CEPERC). This work has been realized in the framework of Workpackages 4, coordinated by University Institute of European Studies (IUSE) in Turin, Italy.