Budget 2015-16 Tax benefits donations for for Swachh Bharat Kosh and Clean Ganga Fund

Under the existing provisions of section 80G of the Income-tax Act, a deduction is allowed in computing the total income of a person in respect of donations made to certain funds and charitable institutions. The deduction is allowed at the rate of fifty percent of the amount of donations made except in the case of donations made to certain funds and institutions formed for a social purpose of national importance, where it is allowed at the rate of one hundred percent, such as the National Defence Fund set up by the Central Government, the Prime Minister’s National Relief Fund, the Prime Minister’s Armenia Earthquake Relief Fund, the Africa (Public Contributions-India) Fund, the National Children’s Fund, the National Foundation for Communal Harmony etc.

“Swachh Bharat Kosh” has been set up by the Central Government to mobilize resources for improving sanitation facilities in rural and urban areas and school premises through the Swachh Bharat Abhiyan. Similarly, Clean Ganga Fund has been established by the Central Government to attract voluntary contributions to rejuvenate river Ganga.

With a view to encourage and enhance people’s participation in the national effort to improve sanitation facilities and rejuvenation of river Ganga, it is proposed to amend section 80G of the Act so as to incentivise donations to the two funds. It is proposed to provide that donations made by any donor to the Swachh Bharat Kosh and donations made by domestic donors to Clean Ganga Fund will be eligible for a deduction of hundred per cent from the total income. However, any sum spent in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013, will not be eligible for deduction from the total income of the donor.

The existing provisions of section 10(23C) of the Act provide for exemption from tax in respect of the income of certain charitable funds or institutions like the Prime Minister’s National Relief Fund ; the Prime Minister’s Fund (Promotion of Folk Art); the Prime Minister’s Aid to Students Fund; the National Foundation for Communal Harmony. Considering the importance of Swachh Bharat Kosh and Clean Ganga Fund, it is also proposed to amend section 1 0(23C) of the Act so as to exempt the income of Swachh Bharat Kosh and Clean Ganga Fund from income-tax.

These amendments will take effect retrospectively from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent assessment years.

NOTE ON RELEVANT CLAUSES  OF FINANCE BILL 2015

Clause 7 of the Bill seeks to amend section 10 of the Income-tax Act relating to incomes not included in total income.

The existing provisions of clause (23C) of the said section provide for exemption from tax in respect of the income of certain charitable funds or institutions like the Prime Minister’s National Relief Fund; the Prime Minister’s Fund (Promotion of Folk Art); the Prime Minister’s Aid to Students Fund; the National Foundation for Communal Harmony etc.

It is proposed to amend the aforesaid clause by inserting two new sub-clauses (iiiaa) and (iiiaaa) so as to exempt income received by any person on behalf of the Swachh Bharat Kosh, set up by the Central Government and to exempt income received by any person on behalf of the Clean Ganga Fund, set up by the Central Government.

These amendments will take effect retrospectively from 1st of April, 2015 and accordingly apply in realtion to assessment year 2015-16 and subsequent assessment years.

Clause 21 of the Bill, seeks to amend section 80G of the Income-tax Act relating to deduction in respect of donations to certain funds, charitable institutions, etc.

Under the existing provisions of the aforesaid section, an assessee is allowed a deduction from his total income in respect of donations made by him to certain funds and charitable institutions. The deduction is allowed at the rate of hundred per cent. of the amount of donations made to certain funds and institutions formed for a social purpose of national importance, like the Prime Ministers’ National Relief Fund, National Foundation for Communal Harmony etc.

It is proposed to amend sub-section (1) and sub-section (2) of the said section so as to provide for a deduction of hundred per cent. in respect of the sum donated by an assessee to the Swachh Bharat Kosh set up by the Central Government, other than the sum spent by such assessee in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013.

It is further proposed to amend sub-section (1) and sub-section (2) of the said section so as to provide for a deduction of hundred per cent. in respect of the sum donated by a resident assessee to the Clean Ganga Fund set up by the Central Government, other than the sum spent by such assessee in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013.

These amendments will take effect retrospectively from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.

It is further proposed to amend sub-section (1) and sub-section (2) of the said section so as to provide hundred per cent. deduction in respect of donations made to the National Fund for Control of Drug Abuse constituted under section 7A the Narcotics Drugs and Psychotropic Substances Act, 1985.

These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016- 17 and subsequent years.

EXTRACT OF RELEVANT CLAUSES FROM FINANCE BILL 2015

7. Amendment of section 10.

In section 10 of the Income-tax Act,—

(I) after clause (11), the following clause shall be inserted, namely:—

“(11A) any payment from an account, opened in accordance with the Sukanya Samriddhi 5 of 1873. Account Rules, 2014 made under the Government Savings Bank Act, 1873;”;

(II)      in clause (23C), after sub-clause (iiia), the following sub-clauses shall be inserted, namely:— “(iiiaa) the Swachh Bharat Kosh, set up by the Central Government; or

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(iiiaaa) the Clean Ganga Fund, set up by the Central Government; or”;

(III)     with effect from the 1st day of April, 2016—

(a) after clause (23ED), the following clause shall be inserted, namely:—

‘(23EE) any specified income of such Core Settlement Guarantee Fund, set up by a recognised clearing corporation in accordance with the regulations, as the Central Government may, by notification in the Official Gazette, specify in this behalf:

Provided that where any amount standing to the credit of the Fund and not charged to income-tax during any previous year is shared, either wholly or in part with the specified person, the whole of the amount so shared shall be deemed to be the income of the previous year in which such amount is so shared and shall, accordingly, be chargeable to income-tax.

Explanation.—For the purposes of this clause,—

(i) “recognised clearing corporation” shall have the same meaning as assigned to it in clause (o) of sub-regulation (1) of regulation 2 of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 made under the Securities and Exchange Board of India Act, 15 of 1992.;

(ii) “regulations” means the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 made under the Securities and Exchange Board of India Act, 15 of 1992.;

(iii)     “specified income” shall mean,— (a) the income by way of contribution received from specified persons;

(b) the income by way of penalties imposed by the recognised clearing corporation and credited to the Core Settlement Guarantee Fund; or

(c) the income from investment made by the Fund;

(iv)     “specified person” shall mean,—

(a) any recognised clearing corporation which establishes and maintains the Core 50          Settlement Guarantee Fund; and

(b) any recognised stock exchange being shareholder in such recognised clearing corporation;’;

(b)      in clause (23FB), before the Explanation, the following proviso shall be inserted, namely:—

“Provided that nothing contained in this clause shall apply in respect of any income of a venture capital company or venture capital fund, being an investment fund specified in clause

(a) of the Explanation 1 to section 11 5UB, of the previous year relevant to the assessment year beginning on or after the 1st day of April, 2016;”;

(c)      after clause (23FB), the following clauses shall be inserted, namely:—

‘(23FBA) any income of an investment fund other than the income chargeable under the head “Profits and gains of business or profession”;

(23FBB) any income referred to in section 1 15UB, accruing or arising to, or received by, a unit holder of an investment fund, being that proportion of income which is of the same nature as income chargeable under the head “Profits and gains of business or profession”.

Explanation.—For the purposes of clauses (23FBA) and (23FBB), the expression “investment fund” shall have the meaning assigned to it in clause (a) of the Explanation 1 to section 115UB;’;

(d)      after clause (23FC), the following clause shall be inserted, namely:—

‘(23FCA) any income of a business trust, being a real estate investment trust, by way of renting or leasing or letting out any real estate asset owned directly by such business trust.

Explanation.—For the purposes of this clause, the expression “real estate asset” shall have the same meaning as assigned to it in clause (zj) of sub-regulation (1) of regulation 2 of the   Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 made under the Securities and Exchange Board of India Act, 1992;’;    15 of 1992.

(e)      in clause (23FD), after the word, brackets, figures and letters “clause (23FC)”, the words, brackets, figures and letters “or clause (23FCA)” shall be inserted;

(f) in clause (38), the second proviso shall be omitted.

21. Amendment of section 80G.

In section 80G of the Income-tax Act,—

(A) in sub-section (1), in clause (i),—

(I)       after the words, brackets, figures and letters “sub-clause (iiihj) or”, the words, brackets, figures and letters “sub-clause (iiihk) or sub-clause (iiihl) or” shall be inserted;

(II)      after the words, brackets, figures and letters “sub-clause (iiihl) or”, as so inserted, the words, brackets, figures and letters “sub-clause (iiihm) or” shall be inserted with effect from the 1st day of April, 2016;

(B) in sub-section (2), in clause (a),—

(I) after sub-clause (iiihj), the following sub-clauses shall be inserted, namely:—

“(iiihk) the Swachh Bharat Kosh, set up by the Central Government, other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013; or

(iiihl) the Clean Ganga Fund, set up by the Central Government, where such assessee is a resident and such sum is other than the sum spent by the assessee in pursuance of Corporate Social Responsibility under sub-section (5) of section 135 of the Companies Act, 2013; or”;

(II) the following sub-clause shall be inserted with effect from the 1st day of April, 2016, namely:—

“(iiihm) the National Fund for Control of Drug Abuse constituted under section 7A of the Narcotic Drugs and Psychotropic Substances Act, 1985; or”.

( Compiled by Taxguru Team)

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Category : Income Tax (25154)
Type : Articles (14577)
Tags : Budget (1473) Budget 2015-16 (272) CSR (73) Section 80G (48)

7 responses to “Sec. 80G deduction for Donations to Swachh Bharat Kosh & Clean Ganga Fund”

  1. SRIPAL A Jain says:

    Now I want to donate to Swachh Bharat mission so I account no details for transfer the amount

  2. Abhiroop says:

    Sir,
    can a company claim deduction u/s 80G if donations are made to a trust registered u/s 80G and CSR expenditure is being availed for that donation under Companies Act?

  3. Gaurav Gupta says:

    Deduction in respect of donation made to Swachh Bharat Kosh and Clean Ganga Fund is available for the assessment year 2015-16 @ 50% of donation amount subject to qualifying limit u/s.80-G of the I.T. Act.

    • Gaurav Gupta says:

      Correction of Mistake- For the place of Assessment year-2015-16, Assessment year 2014-15 has to be substituted, rest of the matter shall be intact

  4. Komal says:

    whether we can take deduction in F.Y.2014-15 if donation made for swatch bharat abhiyan in the same year?

    • Gaurav Gupta says:

      Yes, it is available for the Assessment year 2014-15 u/s. 80-G of the I.T. Act. The deduction shall be restrict to 50% of donation amount subject to qualifying limit.

  5. sanjay hari gaikawad says:

    Dar sar my ngo 80G and 12A donsan

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