The Central Board of Direct Taxes (CBDT) has notified Patanjali Research Foundation Trust as a ‘research association’ for scientific research, implying donations to the Trust will be eligible for income tax deduction.
The CBDT has granted the status under Section 35(1)(ii) of the Income-tax Act for five years with effect from financial year 2021-22. Section 35 of the Income-tax Act provides for deduction of expenditure of an amount equal to one-and-one-half times of any sum paid to a research association which has as its object the undertaking of scientific research or to a university, college or other institution to be used for scientific research.
A business entity that pays any amount to the Trust for scientific research shall be eligible to claim the expense as deduction from business income under Section 35, thereby reducing their tax outgo. A taxpayer is permitted to deduct any amount paid to an ‘approved scientific research association’ for undertaking scientific research in computing the income under the head of business and profession.
The previously notified status under Section 35 (1) was granted to Bennett University, Greater Noida, Uttar Pradesh under the category of ‘University, College or other institution’ for Scientific Research and Research in Social Science and Statistical Research on March 9, 2021. Before that, in the last one year, similar notified status was granted to Institute of Pesticide Formulation Technology, Gurgaon, on January 28, 2020 and to Indian Institute of Technology (Indian School of Mines), Dhanbad on January 3, 2020.
Neha Malhotra, director, Nangia Andersen LLP, said such provisions serve as tax incentives for spending on scientific research. “Tax breaks in the form of deduction of expenses incurred for specified purposes channelises the funds of the taxpayers in the desired area of investment, that is scientific research in this case. Such provisions serve as a tax incentive for the taxpayer spending on scientific research and source of funds for the research association.”
News Source : Business Line
