35 AC Registration

1. 35AC Registration - A fundraising tool for NGOs Section 35 AC of the Income Tax Act, 1961, is one of the key provision which is relevant for raising funds and resources for NGO’s if understood and used effectively. The objective of Section 35 AC is to encourage business organizations to contribute more in social and economic welfare and upliftment of general public. With the increased emphasis on the corporate social responsibility in the corporate sector and ostentatious display of charity by people like Bill Gates and Warren Buffet, the contribution in the monetary term by the corporate sector in India towards socially relevant project cannot be undermined. NGO’s involved in eligible projects notified by the Central Government for promoting the social and economic welfare can raise resources for eligible project from corporate sector and fulfil their objective of development. Corporates simultaneously can fulfil their corporate social responsibility aspect of the business by contributing towards the eligible projects and gain by availing deduction under Section 35 AC. Thus Section 35 AC can be used as an effective tool of fund raising by the NGO’s. It can also lead to a mutually beneficial relationship between NGOs and the Corporate Sector. SECTION 35AC Section 35 AC provides that where a person or company incurs any expenditure by way of payments of any sum to :  A public sector company or;  A local authority or;  To an association or institution approved by the National Committee For carrying out any eligible project or scheme for promoting the social and economic welfare of the public as the Central Government may specify, then the amount so paid shall be allowed as deduction from the business income of the assessee/contributor of such amount. In view of W-86, Classic House, GK-II, New Delhi-110048 T: +91 11 40573261 Email: admin@equicorplegal.com

2. NGO’s, the approved association or institution by National Committee can raise funds for their approved from the eligible persons and donors can avail the benefits of tax deductions Eligible persons to make contributions Persons eligible to make contributions include:  An individual;  A Hindu Undivided Family;  A Company;  A Firm;  An Association of persons or Body of Individuals, whether incorporated or not;  A Local authority;  Every artificial juridical person not falling within any of the preceding sub-clauses. The Section 35AC of the Income Tax Act, 1961 allows deduction from the income of the assessee on payments made to eligible organizations and the donors will get this benefit. To avail deduction under Section 35AC, all assessee other than companies should make payment to outside agencies only, whereas companies have the option of either making payment to outside agencies or they can incur expenditure themselves. Procedure for making an application for approval of a project or scheme by the National Committee: In case an applicant wishes to include a project or scheme for promoting the social and economic welfare of public or uplift of the public as ‘Eligible Project or Scheme’, then an application has to be made to National Committee which should contain the following particulars and be accompanied with relevant documents:  Title of project or scheme, date of commencement, duration and likely date of completion; W-86, Classic House, GK-II, New Delhi-110048 T: +91 11 40573261 Email: admin@equicorplegal.com

3.  Estimated cost of project or scheme duly supported by a copy of the resolution of the Managing Committee of the applicant;  Classes of persons who are likely to be benefited from the project or scheme;  Affirmation that no benefit from the project or scheme, other than remuneration or honorarium for whole time or part-time work done or for reimbursement of actual expenses related to the project will accrue to the persons managing the affairs of the association or institution The eligible projects include: i. Family Welfare and immunization ii. Tree plantation iii. Social Forestry iv. Development of Irrigation Resources v. Rural Sanitation - Construction of low cost latrines vi. Medical camps in rural areas vii. Rural Health Programs viii. Land development and recovering of waste land with special concern on ecological improvement ix. Soil and water conservation including harvesting of run off water x. Non formal education and literacy, especially for children and women xi. Rural and non farm activities. xii. Creation of employment opportunities for urban and rural population living below the poverty line. W-86, Classic House, GK-II, New Delhi-110048 T: +91 11 40573261 Email: admin@equicorplegal.com

4. xiii. Supportive services for women to engage in productive work (Children care of working women) xiv. Leprosy eradication xv. Promotion of sports xvi. Construction of dwelling units for the economically weaker sections xvii. Construction of school building for children belonging to the economically weaker sections of the society xviii. Establishment and running of non-conventional and renewable sources of energy systems Any other program for uplift of the rural poor or the urban slum dwellers. Working structure for approval of 35 AC registration W-86, Classic House, GK-II, New Delhi-110048 T: +91 11 40573261 Email: admin@equicorplegal.com

5. Documents requisite: a. Bye Laws of NGO b. Copy of Registration Certificate; c. Copy of resolution with date & seal of the NGO, passed by the Board to undertake the work under S.35 AC of the IT Act; d. A brief note on Proposed Project; e. Brief note on past activities & credentials of Management with details of experience in activities similar to the object of proposed project; f. Information regarding availability of land/infrastructure to execute the project /land documents to be enclosed; g. Expenditure incurred as on date on the proposed project; h. Blue prints along with professional cost estimates in support of construction activities; i. Income criteria for selection of beneficiaries/services to poor/weaker section of the society; j. Information regarding recognition of school/training etc. from the concerned education/technical board; k. Details of similar activities undertaken by NGO & the accomplishments/achievements etc.; l. Annual Reports & Audited Balance Sheets for last 3 financial years; m. Activity Reports of last 3 years; n. Approval under Section 12 A & 80G of IT Act; W-86, Classic House, GK-II, New Delhi-110048 T: +91 11 40573261 Email: admin@equicorplegal.com

6. o. Approval under FCRA, if any Disclaimer Our article is based on the laws of India as on date. The laws and Rules mentioned herein are subject to changes from time to time and any such changes may affect the article. We have no responsibility to update our note for events and circumstances occurring after the date of this memorandum, unless specifically requested for. We do not, in giving this article, accept or assume responsibility for any other purpose or to any other person to whom this memorandum is shown or in whose hands it may come unless expressly agreed by us in writing. W-86, Classic House, GK-II, New Delhi-110048 T: +91 11 40573261 Email: admin@equicorplegal.com