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)
