CSR Spend May Be Entitle For Deduction Under Section 80G Of The IT Act

Background

Section 135 of the Companies Act 2013 (CA 2013) mandates every company with net worth or turnover above the prescribed limits to spend certain portion of its profit towards Corporate Social Responsibility (CSR) activities. While such companies are required to make this spend, the Finance (No.2) Act 2014 restricted its deduction for tax purpose by amending section 37(1) of the Income-tax Act, 1961 (IT Act). Though there is no specific tax exemption that has been extended to expenditure incurred on CSR, spending on several activities which are governed by section other than section 37(1) of the IT Act could be claimed as deduction. One of this section is 80G of the IT Act. However, the claim under section 80G of the IT Act is not free from litigation.