35AC Project

How it is important for NGOs
Contributions made to a project/scheme notified as an eligible project or scheme for the purpose of section 35AC of the Income Tax Act, would entitle the donor to a 100% deduction of the amount of such contribution. Unlike the certificate granted u/s 80G, the certificate u/s 35AC is not given to any organization as a whole, but only to an eligible and approved projects. If general donation is made to a large multi-purpose trust, the donor would not be entitled to the 100% deduction unless he specifies that the amount has been given towards the project or scheme notified as an eligible project or scheme for the purpose of section 35AC of the Income Tax Act. Eligible projects and the schemes for exemption u/s 35AC include one or more of the following:1. Construction and maintenance of drinking water projects in rural areas and in urban slums, including installation of pump-sets, digging of wells, tube-wells and lying of pipes for supply of drinking water 2. Construction of dwelling units for the economically weaker sections 3. Construction of school buildings, preliminary for children belonging to the economically weaker sections of the society 4. Establishment and running of non-conventional and renewable source of energy systems 5. Construction and maintenance of bridges, public highways and other roads 6. Pollution control projects 7. Promotion of sports 8. A weighted deduction of 125% is also allowed for contributions to organizations approved under section 35(1)(ii) (a scientific research institute or a university, college or other institution) specifically for “scientific research,” and for contributions made under section 35(1)(iii) specifically for “research in social science or statistical research.” If an NGO succeeds in getting such an approval for its projects then it stands a very good chance of mobilizing funds from the corporate and the business sector. Business houses making contribution to such approved projects are allowed to show an amount of donation as expenditure in their regular books of accounts. Role of National Committee The Central Government has constituted a National Committee to identify projects and schemes to be notified under section 35AC, such committee normally consists of eminent persons. All NGOs are entitled to apply to the National Committee to get its projects or schemes approved.