Every donors to a scientific research association, a university, college or other institutions is entitled to get deduction of one and one fourth times of the donations paid by them subject to conditions provided in the Act. They are:
The Institution must be notified and the use of donation must be for specified purpose
(i) The association, university, college or the institution,
as the case may be, is notified by the Central Government
for the purpose of clause (ii) or (iii) of sub-section (1)
of section 35, and (ii) the institution etc. uses the
donations for the research purposes. such as (ii) scientific
research, (iii) deals with research in social science or
To get the aforesaid benefit, the institution etc. has to made an application in Form no. 3CF to the Central Government for its notification in official gazette. The income of an institution notified under section 35(1)(ii) is also exempt from tax u/s 10(21) subject to fulfillment of conditions regarding application of its income for scientific research purposes; its accumulation and use u/s 11(2) and 11(3); and its investment as per modes prescribed u/s 11(5). If exemption is sought u/s 10(21) also, then, annexure to Form 3CF has also to be filled up by the assessee.
The application Form No. 3CF may be filled up carefully,
having regard to the provisions contained in section
35(1)(ii)/(iii), 11(2), 11(3) and 11(5). As the benefit is
sought to be given in respect of scientific research,
research in social science or statistical research
activities, it has to be ascertained whether research is the
sole object or only one of the objects of the university,
association or institution. In case, research is only one of
the objects of the institution, then, it is incumbent on the
institution to maintain separate books of account and
furnish Income and Expenditure and Balance Sheet (Statement
of Affairs) in respect of research activities. Such accounts
have to be audited by an auditor, who should certify that
expenditure incurred was for research work.
Important points while filling up form No. 3CF
(i) Whether research is sole object or only one of the object of the association, institution etc. If research is the only object, then the entity is classified as 'Association' for notification purposes; and if it is one of the objects, then it is classified as 'Institution';
(ii) Whether Income & Expenditure Account and Statement of Affairs are separately maintained for research activity and audited by the auditor;
(iii) Whether income has been applied or accumulated, as the case may be, for research purposes only;
(iv) Whether surplus funds are invested in the modes prescribed in section 11(5);
(v) Details of research projects completed and research projects intended to be taken up in the ensuring years; and
(vi) Any benefit granted to the interested persons or major donors.
What is approval u/s 80G(5)? Is it necessary for a charitable Institution? How to apply for it? What is the use of approval u/s 80G(5) for Charitable Trust, Charitable Society, Non Governmental Organizations (NGO), Section 25 Companies and other exempted institutions?