Allowability of Contribution from the CSR Funds as Deduction Under Section 80G of the Income Tax Act 1961: A Jurisprudential Critique

Ms. Prakriti Singh

doi:https://doi.org/10.17492/jpi.vision.v9i1.912205

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Allowability of Contribution from the CSR Funds as Deduction Under Section 80G of the Income Tax Act 1961: A Jurisprudential Critique

Prakriti Singh

https://doi.org/10.17492/jpi.vision.v9i1.912205

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Published Online: June 30, 2022

Author Details ( * ) denotes Corresponding author

1. * Prakriti Singh, Advocate, presently pursuing LLM from National University of Singapore, Delhi High Court, Bar Council of India, New Delhi, Delhi, India (singhprakriti59@gmail.com)

The deductibility of payments out of the CSR funds as a donation under the Indian tax law severely undermines the legislative intent of addressing the menace of tax subsidization of corporate CSR burden through the 2014 amendment, even though there is some judicial support for its deductibility. This article argues against its deductibility from two perspectives: firstly, from the point of view of the meaning and context of donation in Indian tax law and the tests laid down by the Indian Supreme Court in this regard; and secondly in terms of it being a colourable attempt at tax subsidizing.

Keywords

Corporate social responsibility funds; Deduction under section 80G; Section 37(1); Donation; Test of voluntariness; Tax benefits for CSR contribution to charitable institutions