The Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund), was created on 28th March 2020. This was created following the COVID - 19 pandemic in India and will be utilized for aiding people affected by COVID - 19 and other pandemics that may occur in the future. The fund is different from PM National Relief Fund, which is utilized for aid to people affected by natural calamities like earthquakes, floods, etc.
Donation to PM CARES Fund- Eligible Deduction u/s 80G:
After the donation to PM CARES Fund was promoted on various social media platforms there was confusion among the taxpayer if 50% or 100% deduction will be available for the donation under section 80G. The Ordinance 2020 gave clarity on the same. As per the ordinance issued by the Finance Ministry on 31st March, the PM CARES Fund, like the PM National Relief Fund will be eligible for 100% deduction u/s 80G. Here is what the ordinance clarified:
1. The donation made to the PM CARES Fund shall be eligible for 100% deduction under section 80G of the IT Act.
2. The limit on the deduction of 10% of gross income shall also not be applicable for donations made to PM CARES Fund.
3. As the date for claiming deduction u/s 80G under IT Act has been extended up to 30.06.2020, the donation made up to 30.06.2020 shall also be eligible for deduction from income of FY 2019-20.
4. Hence, any person including the corporate paying concessional tax on the income of FY 2020-21 under new regime can make a donation to PM CARES Fund up to 30.06.2020 and can claim deduction u/s 80G against income of FY 2019-20 and shall also not lose his eligibility to pay tax in concessional taxation regime for an income of FY 2020-21.”
Click here to read the official press release
PM CARES Fund- Eligible CSR Activity:
Also, the PM CARES Fund is eligible as a CSR Activity. The official notification was issued in this regard which read: 'Item no. (viii) of the Schedule VII of the Companies Act, 2013, which enumerates activities that may be undertaken by companies in discharge of their CSR obligations, inter alia provides that contribution to any fund set up by the Central Government for socio-economic development and relief qualifies as CSR expenditure. '
Note: Immediately after the announcement of the fund, there have been instances wherein fake accounts have been opened with similar UPI ID, intended to scam people. Thus, it is important to check all the details carefully when donating to the fund. Only rely on the information given in official social media handles of the government. Do not open links provided by any other person on social media.
A Brief about Section - 80G
Section 80G of the Income Tax Act, 1961 specifies that any individual/business can claim deduction on the amount donated by him/her towards specified relief funds and charitable institutions, at the time of return filing. This deduction is allowed over and above the deduction of 1,50,000 INR allowed u/s 80C and can be claimed by anyone irrespective of the income coming by way of salary or business.
For this purpose, donations must be made to the list specified by the government. These deductions may be allowed up to 50% or 100% depending on the institution/fund. Donations made through a bank can claim a deduction to the full upper limit, however, donations made through cash can claim a deduction for a maximum of 2,000 INR.
Clarifications for Deduction u/s 80G:
• Individuals/businesses who have made donations in kind have to claim the receipt of such payment, else it will not be eligible for deduction
• There is no maximum limit for claiming deduction u/s 80G, however, in some cases, the deduction is limited to 10% of the Adjusted Gross Total Income of the individual/business
Conclusion: Contribution to PM Cares Fund is eligible for 100% deduction under section 80G. Any donation made till 30th June 2020 will be eligible for deduction from the Income of the Financial Year 2019-20 while filing returns. The donation to PM Cares Fund also qualifies as eligible CSR Activity.
CAclubindia
