35AC Registration - A
fundraising tool for NGOs
Section
35 AC of the Income Tax Act, 1961, is one of the key provision which is
relevant for raising funds and resources for NGO’s if understood and used
effectively.
The
objective of Section 35 AC is to encourage business organizations to contribute
more in social and economic welfare and upliftment of general public. With the
increased emphasis on the corporate social responsibility in the corporate
sector and ostentatious display of charity by people like Bill Gates and Warren
Buffet, the contribution in the monetary term by the corporate sector in India
towards socially relevant project cannot be undermined.
NGO’s
involved in eligible projects notified by the Central Government for promoting
the social and economic welfare can raise resources for eligible project from
corporate sector and fulfil their objective of development.
Corporates
simultaneously can fulfil their corporate social responsibility aspect of the
business by contributing towards the eligible projects and gain by availing
deduction under Section 35 AC. Thus Section 35 AC can be used as an effective
tool of fund raising by the NGO’s. It can also lead to a mutually beneficial
relationship between NGOs and the Corporate Sector.
Section
35 AC provides that where a person or company incurs any expenditure by way of
payments of any sum to :
Ø A
public sector company or;
Ø A
local authority or;
Ø To
an association or institution approved by the National Committee
For
carrying out any eligible project or scheme for promoting the social and
economic welfare of the public as the Central Government may specify, then the
amount so paid shall be allowed as deduction from the business income of the
assessee/contributor of such amount. In view of NGO’s, the approved association
or institution by National Committee can raise funds for their approved from
the eligible persons and donors can avail the benefits of tax deductions
Eligible
persons to make contributions
Persons
eligible to make contributions include:
Ø An
individual;
Ø A
Hindu Undivided Family;
Ø A
Company;
Ø A
Firm;
Ø An
Association of persons or Body of Individuals, whether incorporated or not;
Ø A
Local authority;
Ø Every
artificial juridical person not falling within any of the preceding
sub-clauses.
The
Section 35AC of the Income Tax Act, 1961 allows deduction from the income of
the assessee on payments made to eligible organizations and the donors will get
this benefit. To avail deduction under Section 35AC, all assessee other than
companies should make payment to outside agencies only, whereas companies have
the option of either making payment to outside agencies or they can incur
expenditure themselves.
Procedure
for making an application for approval of a project or scheme by the National
Committee:
In
case an applicant wishes to include a project or scheme for promoting the
social and economic welfare of public or uplift of the public as ‘Eligible
Project or Scheme’, then an application has to be made to National Committee
which should contain the following particulars and be accompanied with relevant
documents:
Ø Title
of project or scheme, date of commencement, duration and likely date of
completion;
Ø Estimated
cost of project or scheme duly supported by a copy of the resolution of the
Managing Committee of the applicant;
Ø Classes
of persons who are likely to be benefited from the project or scheme;
Ø Affirmation
that no benefit from the project or scheme, other than remuneration or
honorarium for whole time or part-time work done or for reimbursement of actual
expenses related to the project will accrue to the persons managing the affairs
of the association or institution
The
eligible projects includes:
- Family Welfare and immunization
- Tree plantation
- Social Forestry
- Development of Irrigation
Resources
- Rural Sanitation - Construction
of low cost latrines
- Medical camps in rural areas
- Rural Health Programs
- Land development and recovering
of waste land with special concern on ecological improvement
- Soil and water conservation
including harvesting of run off water
- Non formal education and
literacy, especially for children and women
- Rural and non farm activities.
- Creation of employment
opportunities for urban and rural population living below the poverty
line.
- Supportive services for women to
engage in productive work (Children care of working women)
- Leprosy eradication
- Promotion of sports
- Construction of dwelling units
for the economically weaker sections
- Construction of school building
for children belonging to the economically weaker sections of the society
- Establishment and running of
non-conventional and renewable sources of energy systems
Any other program for uplift of the rural poor or the urban slum dwellers.
Documents
requisite:
- Bye Laws of NGO
- Copy of Registration
Certificate;
- Copy of resolution with date
& seal of the NGO, passed by the Board to undertake the work under
S.35 AC of the IT Act;
- A brief note on Proposed
Project;
- Brief note on past activities
& credentials of Management with details of experience in activities
similar to the object of proposed project;
- Information regarding availability of land/infrastructure to
execute the project /land documents to be enclosed;
- Expenditure incurred as on date
on the proposed project;
- Blue prints along with
professional cost estimates in support of construction activities;
- Income criteria for selection of
beneficiaries/services to poor/weaker section of the society;
- Information regarding
recognition of school/training etc. from the concerned
education/technical board;
- Details of similar activities
undertaken by NGO & the accomplishments/achievements etc.;
- Annual Reports & Audited
Balance Sheets for last 3 financial years;
- Activity Reports of last 3
years;
- Approval under Section 12 A
& 80G of IT Act;
- Approval under FCRA, if any
For any
35AC registration, please contact at admin@equicorplegal.com
/+91 9958709189
