Can csr expenditure be claimed under 80g?

Asked by: Charlie Young  |  Last update: 18 June 2021
Score: 5/5 (17 votes)

While the Tribunal has remanded the issue to the tax officer for fresh examination, it has made an important observation that CSR spend, even though made under a legal obligation under section 135 of CA 2013, can be claimed as deduction under section 80G of the IT Act (except for Swachh Bharat Kosh and Clean Ganga Fund ...

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In this regard, Is CSR expenditure tax deductible?

CSR expenditure, being an application of income, is not incurred wholly and exclusively for the purposes of carrying on business. ... Thus, it is a clear that the CSR expenditure referred to in section 135 cannot be claimed as a tax deductible expenditure under section 37(1) of the IT Act.

Also question is, Can CSR expenditure be claimed as business expenditure?. The amount spent by a company towards CSR cannot be claimed as business expenditure.

Moreover, Is CSR expenditure disallowed?

Taxpayers were claiming CSR expenditure as business expenditure. However, the Finance (No 2) Act, 2014 introduced Explanation 2 to Section 37(1)4 to disallow any expenditure incurred by the taxpayer on the activities relating to CSR referred to in Section 135 of the Companies Act.

Is company eligible for 80G deduction?

Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G of the Income Tax Act. Only donations made to prescribed funds qualify as a deduction. ... This deduction can be claimed by any taxpayer – individuals, company, firm or any other person.

26 related questions found

How much is 80G exemption?

Section 80G of the Income Tax Act provides a 50% exemption from paying tax on donations made to funds or organizations qualifying under the act. This Section offers tax deductions on donations made to certain funds or charitable organisations with a qualifying limit not exceeding 10% of Adjusted Gross Total Income.

What if CSR expenditure is not incurred?

Transfer of unspent CSR amount to any fund as specified in Schedule VIISecond proviso to section 135(5) of Companies Act, 2013, as amended by Companies (Amendment) Act, 2019 from 22-1-2021, provides that if CSR amount is not spent during a financial year, the Board report shall state reasons for not spending that ...

How do you account CSR expenditure?

In view of the aforesaid requirement any surplus arising out of CSR project or programme or activities shall be recognised in the statement of profit and loss and since this surplus can not be a part of business profits of the company, the same should immediately be recognised as liability for CSR expenditure in the ...

Who are eligible for CSR?

Minimum 3 or more directors must form CSR Committee. Among those 3 directors, at least 1 director must be an independent director. An unlisted public company or a private company shall have its CSR Committee without any independent director if an independent director is not required.

Is donation allowed as business expenditure?

Ltd. V. ACIT, held that payments in respect of “Donation & Subscription”, which are incidental to the business activities are allowable as expenditure under the provisions of the Income Tax Act, 1961, even in the absence of any receipt /80G certificate.

Who can receive CSR funds?

As per guidelines issued by MCA, From 1st April 2021, CSR Funding will be released only to that NGOs, Trusts, Religious Trusts, Societies, 12AA registered entities, 80 G granted entities, Section 8 Company that are registered with MCA by filing Form CSR-1.So, if such institutions willing to receive CSR Funding then it ...

What are CSR rules?

The Act requires companies with a net worth of ₹500 crore or more, or turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more during the immediately preceding financial year, to spend 2 per cent of the average net profits of the immediately preceding three years on CSR activities.

Is CSR compulsory for companies?

Indian corporations have never been more answerable for their social responsibility as they are now, ever since the government notified the new rules in January 2021 underlining the big theme that corporate social responsibility (CSR) is mandatory and a statutory obligation, making India the first country to have done ...

Is CSR applicable for 3 years?

A. 9 As per the provisions of section 135(5), if the Company has not completed the period of three financial years since incorporation, but it satisfies any of the criteria mentioned in section 135(1), then it has to comply with CSR provisions.

What is CSR limit?

Section 135 of the Companies Act 2013 provides the threshold limit for applicability of the CSR to a Company: (a) net worth of the company to be Rs 500 crore or more; or (b) turnover of the company to be Rs 1000 crore or more; or (c) net profit of the company to be Rs 5 crore or more.

What is CSR violation?

After the move was opposed by industry, finance minister Nirmala Sitharaman said on August 23, 2019 that violations of CSR norms under the Companies Act would be treated as a civil liability and not as a criminal offence. ...

How is 80G calculated?

The qualifying limits u/s 80G is 10% of the adjusted gross total income. ... The 'adjusted gross total income' for this purpose is the gross total income (i.e. the sub total of income under various heads) reduced by the following: Amount deductible under Sections 80CCC to 80U (but not Section 80G) Exempt income.

How is 80G donation calculated?

Q- How the different donations can be categorized under Section 80G?
  1. The Deductions which are available = 100% of the amount donated.
  2. The Deductions which are available = 50% of the amount donated.
  3. The Deductions which are available = 100% of the amount donated but, maximum upto the prescribed ceiling.