Tax Concession

Under Section 35 AC of the Income Tax Act for reinvestment of profits in the building of the socio-economic


In order to promote reinvestment of business profits in areas where massive capital input is required for socio-economic development, a tax incentive has been provided under Section 35 AC of the Income-tax Act allowing for full deduction of the entire amount paid by a taxpayer carrying on a business or profession for financing projects or schemes promoting social and economic welfare. In the case of other taxpayers, the deduction is allowed under section 80GGA from his gross total income.

Who can undertake eligible projects and schemes

•    An association

•    An institution

•    A public sector company

•    A local authority

    Payments made by the taxpayer to the above entities are allowable deductions.

*    A company which is a taxpayer may avail of this deduction either by way of payment to the above mentioned entities or by directly undertaking an eligible project or scheme.

Conditions necessary for approval

(i)    the association or institution is

(a)    constituted as a public charitable trust; or

(ii)    Title of project or scheme, date of commencement, duration and the likely date of completion;

(iii)    Estimated cost of the project or scheme duly supported by a copy of the resolution of the managing committee of the association/institution/the local authority/the Board of Directors of the company;

(iv)    Category or class of persons who are likely to be benefited from the project or scheme;

(v)    Affirmation that no benefit from the project or scheme is such which the company is required to execute under any law or under agreement with employees or otherwise.

Procedure before the National Committee

The Committee:

•    Will make further enquiries as deemed fit before making its decision on an application.

•    Accord its approval for a period not extending beyond 3 years at a time

•    Review progress of projects that extent beyond 3 years before according further approval. 

•    Ensure that in the case of a company, adequate arrangements have been made for divesting itself of the ownership of the capital asset acquired or erected for the purpose of the project of the project or scheme.

(c)    Construction of school buildings primarily for children belonging to the economically weaker sections of the society;

(d)    Establishment and running of non-conventional and renewable sources of energy systems:

(e)    Construction and maintenance of bridges, public highways and other roads;

(f)    Promotion of sports

(g)    Pollution control    

(h)    Any other programme for uplift of the rural poor or the urban slum dwellers, as the National Committee may consider fit for support like:

1.    Family Welfare and immunization

2.    Tree plantation

3.    Social forestry

4.    Development of irrigation resources

5.    Rural sanitation-construction of low-cost latrines

6.    Medical camps in rural areas

7.    Rural health programmes

8.    Land development and reclamation of waste land or degraded land with special emphasis on ecological improvement.

9.    Soil and water conservation including harvesting of run off water.

10.    Non-formal education and literacy. Especially for women & children.

11.    Rural non-farm activities.

12.    Creation of employment opportunities for urban and rural population living below the poverty line

13.    Supportive services for women to engage in productive work (care of children of working women by providing an improved environment. Care and food and by establishing crèches/balwadis.etc.)
14.    Leprosy eradication

*    The benefit of the project or scheme shall flow to the public in general or to individuals belonging to the economically weaker sections of the society. The applicant should have the necessary expertise and should maintain separate accounts in respect of the eligible project or scheme.

Functions of the National Committee

The Central Government has constituted this committee with the following functions:

(i)    to approve associations and institutions for the purpose of carrying out any eligible project or scheme: and

(ii)    to recommend to the Central Government projects and scheme of any company including a public sector company a local authority or an approved association or institution for recommendation of a project or scheme by the National Committee should be submitted in two sets, to:

    The Secretary
    National Committee for promotion
    of Social and
    Economic Welfare.
    Department of Revenue, Ministry
    of Finance, Room No.48A North Block
    New Delhi-l10001
    Phone & Fax: 011-23013526

What is an eligible project or scheme

*    An eligible project or scheme is one which the Central Government on the recommendation of the National Committee, pay so notify in the Official Gazette. It should relate to one or more of the following:

(a)    Construction and maintenance of drinking water projects in rural area and in urban slums, including installation of pump-sets, digging of wells; tube wells and laying of pipes for supply of drinking water;

(b)    Construction of dwelling units for the economically weaker sections;

Issued by: Mr.S.Richard Humtsoe
Chairman & Promoter
Nagaland Agency for Global Development (NAGD).