Dear Sir,
I have a following query:
any idividual can donate any amt under 35 AC but whether
a businessman /partner/proprietor of a firm after taking 100% exemption upto
his limit on investments like ppf etc can over & above this also donate to
a NGO having 35 AC exemption any amt he wishes and avail of 100% tax exemption?
Pl reply immediately as it is a query of our donor.
Thanks & rgrds for your wonderful service.
Devendra S. Desai
Founder/Mg. Trustee
Play Together,Stay Together
Devendra S. Desai
Vandana Sonawane
Team CTF
Children Toy Foundation
C/O R.Desai & Co,Modern House,11,Dr. V.B.Gandhi Road,Fort,Mumbai-400001
One Individual donated some amount out of earnings from professional Consultancy work to one approved Cancer Research Unit and got 100% deduction under section 35 A/C independent of other deductions / exemptions against Government specified investments/ Insurance/ PPF etc. As per inputs from srrf members, Individuals not having income from either business or any profession can avail section 80GGA.
DEDUCTION SHOULD NOT BE MORE THAN INCOME
Maximising taxation benefit of S.35AC
The query stated that an individual can donate any amount under S. 35AC, but if an individual who is running a business / profession can donate under S. 35AC and still claim deduction for the same over and above his / her S.80C deductions (PPF, LIC, etc).
OPINION
The above query raised issue of identifying differences between donation under S. 35AC by an individual and by a business.
An individual’s donation to a project falling under S. 35AC comes under the purview of Section 80GGA, this is a much broader section and covers donations not only under S. 35AC but also on research associations (S.35), associations undertaking rural development programmes (covered under S.35CCA). 100% deduction is allowed to such persons. Since the section 80GGA does not fall under S.80C, these deductions have nothing to do with that section and are independent of the same. Deduction under this section should be claimed by individuals not having Income from Business or Profession.
Where payment to S.35AC is made from the business, 100% amount paid under this section is available as a deduction under the business. Thus this deduction becomes part of business profits / losses. In case the business has overall losses, which includes payment to S.35AC, then this loss can be carried forward as losses to be set off against future income.
Thus essential difference between the two is that in first case, individual who wishes to avail deduction against her/his own income should also make payment to S.35AC project out of his / her personal income to claim 100% deduction. This deduction is in addition to S.80C deductions.
However if the person makes payment from business account the advantage is that the deduction can be claimed even in future as a set off against losses. This would obviously not available in case of individual claiming under S.80GGA.
35 AC is treated like business expense and any payment towards the purpose goes straight into the P&L account, whereas 80C is a personal tax deduction. Thus, any payment u/s 35AC would not qualify for a personal tax deduction.
There is no restriction at all. Individual will claim tax benefit u/s 80GGA for the approved projects u/s 35AC
Thanks
Regards
Rakesh
No limit to contribution (income from business/profession) by a Company / individual for 100% exemption under section 35A/C OR section 80GG(A ?) contribution, towards the same purpose as under 35 A/C, from other sources of income if the Individual does not have income from business / profession, independent of investments under PPF, etc.
I agree with Mr. Subhash Mittal, that an individual can get 100% deduction against income for a donation to a charity approved under Sec. 35AC. The deduction for the individual is under Section 80GGA and not Section 80G, as mentioned by Subhash. Section 80C is for other deductions and Section 80G for charitable deductions to approved organisations, normally @50% of donation and with a limit related to the persons taxable income.
Dear Devendra,
From what i have understood, you are asking is from an individual’s perspective, if an individual with business / professional income can donate to a S.35AC project and receive tax exemption even if s/he has already exhausted tax exemptions under S.80C (PPF, etc).
My response is yes. S. 35AC exemption is not circumscribed by S.80C. In fact 100% deduction can be obtained. Further it has no restrictions like 10% of Total Income as under S.80G.
Hope above is useful.