Very often we come across the sections 80 G, 80 C , 80 DD and some other sections while planning our income taxes. There is a section called 35 AC which is not so popular even amongst income tax practioners mainly because it is very rare. In the sense, there are limited numbers of organizations in the country which has the approval of its projects approved by Govt of India, Ministry of Finance. This article aims at clarifying the taxation provisions of this section 35 AC.
Details of 35 AC under the Income Tax Act 1961
i) Under section 35AC, organisations having income from business or profession can get 100 per cent deduction. Charitable Organisations can get registered themselves u/s. 35AC by applying to the National Committee under rule 11F to 11-O, if they are carrying on any business.
ii) The
Central Goverment has specified various types of projects of national needs for which Charitable Organisations can make donations.
iii) A certificate has to be issued to the donor in Form 58A. This certificate will enable the donor to claim exemptions.
iv) Section 35AC provides deduction from income from business and profession. Similar deduction is also available u/s. 80GGA, for assessees having income from other heads.
REGISTRATION UNDER SECTION 35Ac
The Central Government approves certain NGOs and notifies them as eligible for project or schemes for the purposes of section 35AC. If an NGO succeeds in getting such an approval for its projects then it stands a very good chance of mobilising funds from the corporate and the business sector. Business houses making contribution to such approved projects are allowed the benefits of deducting such contribution as expenditure.
NATIONAL COMMITTEE
The Central Government has constituted a National Committee to identify projects and schemes to be notified under section 35AC, such committee normally consists of eminent persons. All NGOs are entitled to apply to the National Committee to get its projects or schemes approved.
CERTIFICATE TO BE ISSUED TO THE DONOR
01 All approved NGOs are required to issue a certificate to the donor for all contributions & receipts under section 35AC. The certificate is to be issued in Form 58A.
02 This certificate will enable the donor to claim exemption from its taxable income.
DEDUCTION OF CONTRIBUTION UNDER SECTION 80GGA
Section 35AC is available to assessees who have income from the head ‘business’ or ‘profession’. Therefore, for the assessees who do do not have income from business or profession, section 80GGA provides for deduction on donations made to eligible projects under section 35AC. 100 per cent deduction is available under section 80GGA, subject to the available gross total income under section 80A. Therefore, unlike section 35AC, deduction under section 80GGA cannot be carried forward in the form of losses to next year .
Source : http://www.incometaxforngos.org/sec-35ac.htm
