Budget Series #3 Budget 2022 recommendations :Allow deduction for corporate social responsibility expenditure

DIRECT TAXES PROFESSIONALS ASSOCIATION

Sec. 37Allow deduction for corporate social responsibility expenditure Sec. 37

At present the Income Tax Act provides that the expenses incurred by the taxpayer on the activities relating to CSR referred to in Section 135 of the CA 2013 shall not be deemed to be incurred for the purpose of business and hence, shall not be allowed as a deduction for computation of income. The corporate sector spending on CSR is for laudable purposes andeffectively assisting the Government in undertaking social projects for the country. Therefore, the deduction must be allowed for expenses on CSR for the purpose of Income tax.

Recommendation: It is recommended that a deduction of CSR expenses incurred by the taxpayers pursuant to the policy of the Central Government and provisions of the Companies Act should be allowed in computing business income.