TaxTMI 
TaxTMI 
Redefining Tax Deductions for Scientific and Rural Advancement : Clause 135 of the Income Tax Bill, 2025 vs. Section 80GGA of the Income Tax Act, 1961
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....orically provided similar deductions. The legislative context for such provisions is grounded in the policy objective of incentivizing voluntary contributions towards scientific, social science, statistical research, and rural development, thereby aligning private financial incentives with national developmental priorities. The significance of these provisions lies in their dual role: stimulating philanthropic engagement from taxpayers and channeling private resources into sectors critical for sustainable development. Over the decades, Section 80GGA has undergone several amendments to reflect evolving policy priorities, compliance mechanisms, and administrative oversight. With the introduction of Clause 135 in the draft Income Tax Bill, 2....
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.... * Scientific Research: Donations to research associations, universities, colleges, or other institutions approved for scientific research (referencing section 45(3)(a)(i) for approval criteria). * Social Science or Statistical Research: Donations to research associations, universities, colleges, or other institutions approved for research in social science or statistical research (referencing section 45(3)(a)(ii)). This structure mirrors the corresponding provisions in Section 80GGA(2)(a) and (aa), which also allow deductions for donations to approved entities engaged in scientific or social science/statistical research. Notably, Clause 135 omits explicit reference to donations for rural development, conservation of natural resources....
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.... that deduction will be allowed based on information furnished by the payee (recipient) to the prescribed income-tax authority, subject to verification as per the Board's risk management strategy. This is a clear move towards data-driven compliance, leveraging third-party reporting to reduce fraudulent claims and enhance transparency. Section 80GGA, as amended by the Finance Act, 2020, incorporates an almost identical provision, requiring deduction claims to be matched with information furnished by the payee. This reflects a broader trend in Indian tax law towards real-time information reporting and cross-verification (akin to TDS/TCS regimes and Form 26AS for other transactions). Comparative Analysis with Section 80GGA of the Income....
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....xpenses u/s 35 or analogous provisions). Cash Contribution Limit Section 80GGA(2A) and Clause 135(2)(b) both prohibit deductions for cash donations exceeding Rs. 2,000, reflecting a policy to promote traceable, non-cash transactions and curb abuse. Protection Upon Withdrawal of Approval Section 80GGA contains Explanations ensuring that deductions are not denied if the recipient's approval is withdrawn after the donation is made. Clause 135(3) carries forward this protection, providing legal certainty for donors. Mode of Claim and Compliance Section 80GGA (Explanation inserted by the Finance Act, 2020) and Clause 135(4) both require that deductions be allowed on the basis of information furnished by the payee to the prescribed a....
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....45(3)(a)(i)/(ii). The interpretation of these cross-references depends on the structure of the new Act, and clarity will be essential to avoid confusion. * Absence of Specific Provisions for Overlap * Clause 135 does not explicitly prohibit double deduction for the same payment under other provisions, though such a rule may exist elsewhere in the Bill. Explicit mention would enhance clarity. * Compliance Dependence on Recipient Institutions * By shifting the compliance burden to recipient institutions (for reporting donations), there is a risk that inadvertent non-reporting by recipients could prejudice donors. Mechanisms for rectification or appeal may be necessary. Practical Implications For Taxpayers: * Non-business asse....
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....ons for scientific/social science/statistical research Same as left, plus rural development, conservation, afforestation, public sector companies for eligible projects, poverty eradication funds Clause 135 narrows the scope; Section 80GGA is broader Approval Requirement Approval u/s 45(3)(a)(i)/(ii) Approval u/s 35(1)(ii)/(iii), Section 35CCA, Section 35CCB, Section 35AC Similar for research; Section 80GGA covers more categories Withdrawal of Approval Deduction not denied if approval withdrawn after payment Same Both protect taxpayer from post-payment withdrawal Exclusion for Business Income No deduction if business/profession income included Same Prevents double deduction Cash Payment Restriction No deductio....