Budget is generally a disappointment for the NGO community, with only a very few benefits.

CSR expenditure of companies not to be tax deductible. Thus a big disappointment for companies, who now may resort to camouflage it under other sections. Or it may benefit NGOs who have S.35AC registration.

Other provisions for NGOs (generally referred to as Charitable Trusts)

Clarification provided for ‘substantially financed’

Certain educational & medical institutions registered under S. 10(23) (under sub-clauses iiiab & iiiad) are exempt from tax if ‘substantially financed by the Govt.’ Currently substantial has not been defined in the Act and courts interpret this based on other provisions in the Act. Govt will now specify exact % of total receipts (including donations, etc., if any), which will entitle the concerned institution to claim exemption from its entire income.

Claim both for Depreciation as well as cost of asset not to be allowed

A Trust which has included acquisition cost of an asset in the application amount, canot again claim depreciation.

Claims under multiple sections not allowed

If a charitable Trust has been registered / approved under. 12AA / S. 10(23), it cannot claim benefit under any other clause of S. 10, except for agriculture income.

Additional powers given to Commissioner for cancellation of S. 12AA registration

Commissioner given additional power to cancel S.12AA registration under following circumstances:

  1. If  income/property of Trust, applied for the benefits of specified persons, like trustee
  2. If funds are invested in prohibited modes.
  3. It is found that charitable trust is generally not applying the income of Trust for public in general.

Relief in case of delayed S.12AA registration

In case of delayed registration under S. 12, any pending assessment on the date of registration would be considered for providing benefit under S. 12A, but not the assessments which are already complete.

Anonymous Donations

Tax calculation method on anonymous donations modified to streamline the same.

Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
e-mail: socio-research@sma.net.in;
website: http://www.srr-foundation.org

This entry was posted in General. Bookmark the permalink.


  1. Rajakumar K says:

    Dear Sir,

    Many companies in India have foreign shareholding more than 50% due to liberalization of FDI policy. These would be “foreign source” as per section 2(1)(vi) of FCRA. Receipt of donation/contribution by NGO (not registered under FCRA) directly or indirectly by these Indian subsidiaries of Foreign Companies are presently violation of FCRA. Sec. 52 of FCRA states that applicability of FCRA is in addition to any other law in force for the time being.

    Clause (iv) of circular No.21/2014 dated 18-6-2014 issued by MCA indicates that Expenditure incurred by Foreign Holding Company for CSR activities in India will qualify as CSR spend of the Indian subsidiary if, the CSR expenses are routed through Indian Subsidiaries and if the Indian Subsidiary is required to do so as per Section 135 of the Companies Act.

    In this changed scenario, can one interpret that NGO (without FCRA registration) can receive donation/contributions from Indian Subsidiary of a Foreign Company, without any prior permission from Ministry of Home Affairs?

    Looking forward to your considered opinion in this regard.

    Thanks & regards,
    Rajakumar K

  2. Thanks for this updates.

  3. Joe D'Souza says:

    with the frequent changes and many interpretations, not forgetting interpretations by NGO leaders, it is important that NGOs evolve a common platform to address common problems and issues to the governmental agencies.
    Also while SRRF has provided a good platform for exchange of information and experiences on finance, accounts and funding matters, expert responses are most essential to keep lesser informed organisations on the correct position and interpretation. SRRF could consider this.
    Thanks and regards,
    Joe D’Souza

  4. C Udayashankar says:

    Thanks for promptitude.
    Well, we have to live with the vagaries of the Government!
    Training courses for the non-profits should include the subject aspects.
    Not-for-profit section under Companies Act seems more attractive than Societies and Trusts!

Comments are closed.