PKP Consult Explains: Section 35AC Tax Benefits for Businesses

Did you know your business can contribute to social good while saving on taxes?  Section 35AC of the Income Tax Act, of 1961, offers a unique opportunity for corporate as well as other non-corporate donors businesses to claim tax deductions for donations made to approved organizations.

This blog post, brought to you by PKPConsult, a company with over 15 years of experience in tax matters, will explain everything you need to know about Section 35AC. We'll break down the eligibility criteria, the types of approved organizations, and the benefits of participating in this program.

So, if you're looking for a way to give back to your community and reduce your tax burden, keep reading!

Applying for Section 35AC Approval: A Step-by-Step Guide

There's no one-size-fits-all application for Section 35AC approval.  Here's what you'll need to do:

1.  Identify the Right Recipient

Your first step is to identify the organization you want to support. Make sure they are eligible to receive donations under Section 35AC.

2. Draft Your Application

Since there's no pre-defined application form, you'll need to create a document outlining your request for approval.

Here's what to include in your application:

• Applicant Details: Clearly state your company name, registration details, and contact information.
• Organization Details: Provide the complete name, registration number, and address of the organization you wish to donate to.
• Project Description: Outline the specific social or economic welfare project your donation will support. Be clear about the project's goals and how it aligns with the objectives of Section 35AC.
• Supporting Documents: Attach relevant documents that strengthen your application. This may include the organization's registration certificate, project proposal, and any supporting documentation for the project's social or economic welfare impact.
• Pro Tip: While there's no set format, keep your application concise and professional. Clearly highlight the value your donation brings to the chosen project and how it aligns with Section 35AC's goals.

3. Submit Your Application:

Once you've finalized your application, send it to the address mentioned earlier:

Secretary,

National Committee for Promotion of Social and Economic Welfare,

Department of Revenue,

Government of India,

North Block, New Delhi - 110 001

Remember, applying for Section 35AC approval can take some time. Be patient, and consider seeking guidance from a qualified tax professional at PKPConsult to ensure your application is complete and maximizes your chances of approval.

Understanding the Required Documentation for Approval

While there's no standardized application form, the National Committee requires specific details and documents to assess your request. Here's what you'll typically need to include:

Organization Information:

• Full Name and Address
• PAN (Permanent Account Number)
• Copies of registration documents like trust deed, Memorandum of Association, etc.
• Details of the managing committee members, including their names, addresses, and any past involvement with the organization within the last three years.
• If applicable, provide details of any existing approvals under Section 80G or specific clauses of Section 10(23C) of the Income Tax Act.

Project Details:

• Activity reports for the past three years (or for the duration of your organization's existence if it's less than three years).
• A detailed project proposal outlining:
• Estimated project cost
• Project duration
• Current project status
• Categories of people who will benefit from the project

Important Note

• Be prepared to explain if the project falls under any legal obligations your company needs to fulfill.
• The National Committee meticulously evaluates applications. Ensure your project aligns with Section 35AC's goals of promoting social and economic welfare.

Benefits of Section 35AC Approval

1. Increased Funding Potential- If your organization receives Section 35AC approval, it becomes eligible to receive donations from businesses looking to reduce their tax burden.
2. Tax Savings for Donors- Companies donating to approved organizations under Section 35AC can claim a minimum deduction of 100% of the donated amount, significantly reducing their taxable income.
3. Approval Validity- Section 35AC approvals are typically valid for three years, with the option for renewal upon recommendation by the National Committee.

By following these steps and providing the necessary documentation, you can increase your chances of securing Section 35AC approval for your chosen organization.

Remember, PKPConsult's tax professionals can guide you through the process to ensure a smooth application experience.