- A new column has been inserted in ITR Form 6 to provide details of apportionment made by companies from the net profit of the company for CSR activities.
- Expenditure on CSR related activities are to be incurred mandatory under the Indian Companies Act, 2013 by certain companies and these expenditures are not deductible under section 37(1) of the Income-tax Act, 1961.
- All the companies which are covered under Section 135 of Companies Act 2013 are required to disclose CSR expenditure during the year in its Board's Annual Report and now also in the new Income tax Return Form No. 6.
The Central Board of Direct Taxes (CBDT) has notified income tax return (ITR) forms applicable to Assessment Year 2018-19. These ITR forms will be applicable to filing of income tax return in respect of income earned from April 1, 2017 to March 31, 2018. The new forms incorporate the changes made by the Finance Act, 2017 in the Income Tax Act, 1961.
The new ITR forms have shifted the entire onus on the taxpayers to prove their claim for deductions, expenses or exemptions. This year, the ITR forms seek a lot of new information from taxpayers. Reporting CSR appropriations is a new inclusion.
While CSR expenditure is not a ‘business write-off’ or a deductible business expenditure under section 37(1) of the Income-tax Act, 1961, CSR contributions made by the company to the company’s own Foundation having 80G certificate or to an NGO (Trust, Society or Section 8 Company) having 80G certificate would be 50% tax deductible.
Contribution to the Prime Ministers National Relief Fund would be 100% tax deductible and the easiest form of CSR activity.
Mandatory for whom?
All companies (Public, Private or Foreign) registered under the Indian Companies Act having either Net-worth of Rs. 500/- crore or more or Turnover of Rs. 1,000/- crore or more or Net Profit of Rs. 5 crore or more, are required u/s 135 of the Indian Companies Act 2013 to apart from constituting a CSR Committee of the Board and formulate a CSR Policy for the company, to ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its CSR Policy.