CBDT extends I-T deductions on donations made to Patanjali research trust

In a shot in the arm for yoga guru Ramdev-run Patanjali group, the Income Tax Department has extended tax deductions on donations made to Patanjali Research Foundation Trust for five years.

Businesses making donations to Patanjali Research Foundation Trust during 2021-22 to 2026-27 can claim tax deduction on such contributions, according to a Central Board of Direct Taxes (CBDT) notification.

Patanjali Group, which sells products ranging from toothpaste to instant noodles and toilet cleaner, is among the fastest growing consumer goods companies in the country.

The exact linkage between Patanjali Research Foundation Trust and Patanjali Ayurved Ltd - the multibillion dollar corporation - is not known.

"... the Central Government hereby approves M/s Patanjali Research Foundation Trust, Haridwar under the category Research Association for Scientific Research for the purposes of clauses (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961...," the Central Board of Direct Taxes (CBDT) said in a notification.

This shall be applicable for Assessment Year(s) 2022-23 to 2027-28, it added.

Under Income Tax rules, in computing the income under head business and profession, a taxpayer is permitted to deduct therefrom, any amount paid to an 'approved scientific research association' for undertaking scientific research.

Patanjali Research Foundation Trust, Haridwar, has been notified as the 'approved research association', accordingly, a business entity that pays any amount to the Foundation for scientific research shall be eligible to claim the said expense as deduction from business income under section 35 of the Income Tax Act, thereby reducing their tax outgo.

Nangia Andersen LLP Director Neha Malhotra said India understands that investment in research and development is the key to economic growth and a step towards self-reliance. Therefore, in addition to increasing government funding on research associations, the government wants to encourage the private sector participation in R&D spending as well.

"Tax breaks in the form of deduction of expenses incurred for specified purposes, channelizes the funds of the taxpayers in the desired area of investment, that is scientific research in this case. Such provisions serve as tax incentive for the taxpayer spending on scientific research and source of funds for the research association," Malhotra added.