News:- Hazy CSR tax laws make companies jittery Starting April 1, the corporate social responsibility landscape for India Inc is in for a change. And the clock has started ticking for corporate India to rejig its CSR activities, and bring them in line with the new guidelines. Even as CSR practitioners and corporate lawyers read between the lines of the notified rules under section 135, and the schedule VII of the Companies Act 2013, tax experts point out that the new guidelines could spring a surprise or two on the taxation front for the companies. The ball is now in the court of the Ministry of Finance - in effect, the Central Board of Direct Taxes - to align the existing income tax regulations with the new CSR guidelines. The crux of the issue, say tax experts and corporate lawyers, is whether the CSR spend - now mandated by law - is to be treated as a business expenditure. The Companies Act 1956 - or even the 2013 Act - does not talk about tax treatment of CSR expenses - something that falls under the exclusive domain of the Income Tax law. Moreover, under the old Companies Act of 1956 there is no mention of CSR or equivalent requirement on companies. Such a spend could typically be incurred through a donation route. Under Section 80G of Income Tax Act, 1961, donations to tax registered not-for-profit organisations are eligible for deduction - 50 per cent or 100 per cent - depending on which category they fall under. Tax experts point out that there have been instances where income tax authorities have disputed allowing CSR expenses as business expenditure. Tax authorities claim that under section 37 of the Income Tax law, CSR is not business expenditure. Only business related expenses can be treated as tax deductible, they contend. Read more at: business-standard/article/opinion/hazy-csr-tax-laws-make-companies-jittery-114030200706_1.html
Posted on: Tue, 04 Mar 2014 06:20:06 +0000
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