100% tax exemption under 35AC of the income tax act- To undertake and promote reinvestment of business profits in areas where massive capital input is required for socio-economic development, a tax incentive has been provided under 35AC, of the Income Tax Act allowing for full deduction of the entire amount paid by a taxpayer carrying on a business or profession for financing projects or schemes promoting social and economic welfare. The objective of the said provision is to encourage business organizations and wealthy individuals to contribute more in social and economic welfare of general public.
Registration of NGOs under the provisions of 35AC of the Income Tax Act is less
known but a highly useful instrument of fund raising for some social cause. The
objective of the said provision is to encourage business organizations and wealthy
individuals to contribute more in social and economic welfare and uplift of general
public. With the increased emphasis on the corporate social responsibility and ostentatious
display of charity by people like Bill Gates and Warren Buffet, the contribution
in monetary term by the corporate sector in India towards socially relevant project
cannot be undermined. NGOs involved in eligible projects, notified by the Central
Government for promoting the social and economic welfare, can raise resources for
eligible project from corporate sector or wealthy individuals and fulfill their
objective of development.
Thus, Section 35AC can be used as an effective tool of fund raising by NGOs. Millions of rupees could be raised from this facility. It can also lead to a mutually beneficial relationship between NGOs and the corporate sector. By donating any amount for any approved project under the provisions of 35AC, a donor will receive 100% rebate of income tax on the donated amount.
Normally, a approved amount could be raised and utilized within a given period.
In selective cases extension of period could be permitted for completion of the
project. Generally, such notified Eligible Project or Scheme get the node of the
National Committee as mentioned below-
The Following Projects are Eligible for Approval Under 35AC -
- 1: Construction and maintenance of drinking water projects in rural areas and in urban slums, including installation of pump-sets, digging of wells, tube wells and laying of pipes for supply of drinking water.
- 2: Construction of dwelling units for the economically weaker sections.
- 3: Construction of school buildings primarily for children belonging to the economically weaker sections of the society.
- 4: Establishment and running of non-conventional and renewable sources of energy systems.
- 5: Construction and maintenance of bridges, public highways and other roads.
- 6: Any other programme for uplift of the rural poor or the urban slum dwellers, as the National Committee may consider fit for support, Like :- Promotion of sports,Pollution control.
- 7: Establishment and running of educational institutions in rural areas, exclusively for women and children up to 12 years of age;
- 8: Establishment and running of hospitals and medical facilities in rural areas, exclusively for women and children up to 12 years of age;
- 9: Establishment and running of creches and school for the children of workers employed in factories or at building sites;
- 10: Encouraging the production of bacteria induced fertilizers;
- 11: Any programme that promotes road safety, prevention of accidents and traffic awareness;
- 12: Construction of hostel accommodation for women or handicapped individuals or individuals who are of the age of sixty-five years or more;
- 13: Establishment and running of institutions for vocational education and training in rural areas or towns which consist of population of less than 5 lakhs.
- 14: Establishment and running of institutions imparting education in the field of engineering and medicine in rural areas or towns which consist of population of less than 5 lakhs.
- 15: Plantation of softwood on degraded non-forest land.
- 16: Any programme of conservation of natural resources or of a forestation.
- 17: Relief and rehabilitation of handicapped individuals.
35AC Registration is must for various Big Projects & Donation.
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