Recently with the Union budget the government has provided simplicity on tax aspects of corporate social responsibility (CSR). Clarifying the government’s attitude on the issue of possible tax benefits for CSR activities Central Board of Direct Taxes (CBDT) Chairman said, certain Income Tax Act provisions, deductions are allowed for some activities.
Under the new Indian Companies Act, certain class of profitable entities is required to covering out, at least, 2% of their three-year average annual net profit towards CSR activities.
Under the Union Budget, the government said that as the application of income is not allowed as deduction for the purposes of computing taxable income of a company, amount spent on CSR cannot be allowed as deduction for computing taxable income of the company. However, deductions could be allowed for certain CSR activities.
