What is 35ac:-
A Non Government Organization is made for the welfare of the society. They require some monetary partner to run their welfare identified lives up to expectations. These conglomerations mastermind their stores through donations made to them by the government or different people or corporate figures. So to lure the fund for these welfare conglomerations, the government has given some duty relief and profits to those making donations. The Income Tax Act has certain procurements which offer tax breaks to the donors. All NGOs may as well benefit the playing point of these procurements to draw in potential givers. Area 35ac is one of such segments. Anyway this segment furnishes benefit to just those assessees who have salary from the head business. Under segment 35 ac, organizations having livelihood from business can get 100 hundred percent tax rebate. Magnanimous organizations can get enlisted themselves under section 35 ac by applying to the National Committee in the event that they are carrying on any business. The endorsement under section 35 ac is for three years. After the expiry, the organization has to renew its 35ac.
Following application and documents are required for registration under section 35ac:-
1. The requisition is to be prepared in two sets, composed either in Hindi or English.
2. Details like name, location and status of inquirer, the area/ ward round where assessed/pan number.
3. Audited Balance Sheet, Profit& Loss Account or Income& Expenditure Account for the latest year and two preceding years.
4. How is it constituted i.e. if as a trust, society, and so on upheld by important reports like trust deed, tenets & regulation, update of companionship and enrollment testament, if any.
5. Name & Addresses of the persons supervising the issues of the acquaintanceship or organization, incorporating the individuals who left the conglomeration however were administering the undertakings of the affiliation or foundation throughout the 3 years going before the date of provision.
6. In the event that the cooperation or foundation is registered under section 10(23)(c) or is affirmed for the reasons of segment 80g, the particulars of such approbation conceded.
7. Short particulars of the activities of the affiliation or organization throughout 3 years going before the date of provision or since initiation if the acquaintanceship or establishment is less than 3 years of age.
8. Such other information as the association or institution may like to place before the National Committee.
Additional information regarding the project / scheme to be submitted:-
1. Title of project or scheme
2. Date of commencement.
3. Term and the conceivable date of completion.
4. Assessed cost of the venture.
5. Category of persons who are prone to be profited from the venture or plan.
6. Certification that no profit from the venture or plot other than compensation or
honorarium will accumulate to persons administering the issues of the NGO.
7. Such different particulars as the aspirant may put before the National Committee.
Projects which are applicable for 35ac: -
NGOs can get registration under section 35 ac of Income Tax Act for projects which supports the following sectors :-
(a) 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.
(b) Construction of dwelling units for the economically weaker sections.
(c) Construction of school buildings primarily for children belonging to the economically weaker sections of the society.
(d) Establishment and running of non-conventional and renewable sources of energy systems.
(e) Construction and maintenance of bridges, public highways and other roads.
(f) Any other programme for uplift of the rural poor or the urban slum dwellers, as the National Committee may consider fit for support.
(g) Promotion of sports
(h) Pollution control
(i) Establishment and running of educational institutions in rural areas, exclusively for women and children up to 12 years of age;
(j) Establishment and running of hospitals and medical facilities in rural areas, exclusively for women and children up to 12 years of age;
(k) Establishment and running of creches and school for the children of workers employed in factories or at building sites;
(l) Encouraging the production of bacteria induced fertilizers;
(m) Any programme that promotes road safety, prevention of accidents and traffic awareness;
(n) Construction of hostel accommodation for women or handicapped individuals or individuals who are of the age of sixty-five years or more;
(o) Establishment and running of institutions for vocational education and training in rural areas or towns which consist of population of less than 5 lakes .
(p) 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 lakes.
of softwood on degraded non-forest land.
(r) Any programme of conservation of natural resources or or a forestation.
(s) Relief and rehabilitation of handicapped individuals.
Condition necessary for approval:-
1. The activities of the association or institution are open to citizens of
any distinction and are not for the benefit of any individual or community.
- Persons managing the affairs of the association or institution are persons of proven integrity.
- The association or institution maintains regular account of its receipts and expenditure.
- The instrument or the guidelines or regulations overseeing the cooperation or foundation which do not hold any procurement for the exchange of the entire or any part of its earnings or possessions for any reason other than an altruistic reason.
- The profit of the task or plan may as well stream to general society as a rule or to people having a place with monetarily weaker segments of the society. The candidate might as well have the essential ability and may as well look after divide accounts in appreciation of the qualified task or plan.
Certificate to be issued to donor under section 35ac:-
All approved Non Government Organizations are supposed to issue a certificate to the donor for all contributions & receipts under section 35AC. The certificate is to be issued in Form 58A.
This certificate will enable the donor to claim tax benefit from its taxable income. Besides, the NGOs should also send an Annual Report to the National Committee indicating the progress of the work relating to the project/scheme and the following information in respect of each contributor :-
1. Name of the donor and their addresses..
3. Amount of donations
4. The project/scheme for which the donation is made.
5. Total amount of donation received during the year.
6. A certificate has to be issued to the donor in Form 58A. This certificate will enable the
donor to claim tax exemptions.
7. Total cost of the project approved by the National Committee.
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.
35 1 2 and 35 1 3: -
Any scientific research association or organization which has its objects, carrying out the scientific research or social science research or social science research can be approved under section 35 1 2 and 35 1 3 in accordance with the guidelines and other conditions as may be notified in the official gazette of the central government. The donor will receive 175% weighted deduction on the donated amount as per amendment by the Finance Act 2010.
The application for approval under section 35 1 (ii) / 35 1 (iii) of Income Tax Act 1961 may be submitted to the CIT/ DIT- IT of the jurisdiction of the assessee association along with following details in prescribed form :-
- List of assets / facilities owned used for scientific research / Social science research by the applicant.
- Details of past research projects undertaken by the applicant, such as research projects completed/ underway/ any publication of research projects.
- Past research activities such as whether any new product/process developed, approved, any product of import substitution.
- Patents filed and details of the filing.
- Earnings from such patents etc.
- Proposed research project to be undertaken.
- List of the donors and amount received as donations.
- Total cost of the project approved by the National Committee.
- Amount utilized in such research activities.
Advantages of 35ac: -
To initiate and promote reinvestment of business profits in sectors where tremendous capital input is required for social economic development, a tax rebate has been provided under section 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 mission of the said provision is to uplift business organizations and wealthy individuals to grant more in social and economic welfare of general public. By donating any amount for any approved project under the provision of 35 AC of Income Tax Act, a donor will receive 100% rebate of Income Tax on the donated amount. Hence, Non Government Organizations can raise millions of rupees for approved projects under section 35AC of Income Tax Act leading to mutually beneficial relationship between corporate sector and civil society.
The National Committee of Central Government of India approves 35 ac for a period of 3 years normally. Extension may be provided as per the satisfactory implementation of project. The National committee may also approve new object oriented projects if it is finding useful for the society or if they are satisfied as per the requirements of the community.