CSR tax issue: MCC Chamber to send representation to Centre

They want to know whether there was any income tax benefit on expenditure incurred on corporate social responsibility

MCC Chamber of Commerce & Industry today said it would send a representation to the Centre seeking to know whether there was any income tax benefit on expenditure incurred on corporate social responsibility.

"The industry was expecting that expenditure incurred on CSR should get the tax benefit. We have decided to make a representation to the government on this," MCC president Sanjay Agarwal said during a debate here on the Union budget.

Senior tax consultant N K Poddar pointed out that on one hand the government was encouraging companies to spend on CSR and on the other it was not allowing tax deduction, which is "not a fair and equitable preposition". Another tax expert Amitav Kothari also echoed the same views.

According to the government: "As the CSR expenditure — being an application of income — is not incurred for the purpose of carrying on business, such expenditures cannot be allowed under the existing provisions of section 37 of the Income Tax Act."

"However, the CSR expenditure which is of the nature described in section 30 to section 36 of the Income Tax Act shall be allowed deduction under those sections subject to fulfilment of conditions, if any, specified therein," the Union Budget proposals for 2014-15 said.

Under the Companies Act, 2013, corporates having net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more, or a net profit of Rs  5 crore or more during any financial year are required to spend two per cent of their profit on activities relating to CSR.