CSR via Trusts and Form 10BE – Legality of 80G Claims

[Ramanathan Seshan]

Dear Experts,

Many companies outsource their CSR activities to implementing agencies or trusts by way of donations. These agencies then carry out CSR projects on behalf of the companies and issue donation receipts along with Form 10BE. However, Section 80G of the Income Tax Act clearly states that deductions are not allowed for CSR expenditures. In such cases, how are companies managing to claim these deductions?

Regards,

S Ram

AI Summary

CSR expenditure ineligible for tax deduction; Form 10BE does not validate deductions for mandated CSR payments.
CSR expenditure is not deductible for income tax purposes and donations made to satisfy statutory CSR obligations cannot be treated as qualifying charitable donations for tax deduction. Receipt of a donation receipt and Form 10BE from an implementing agency does not change the legal character of a CSR-mandated payment, and claiming deduction on that basis risks assessment disallowance and penalties.