Understanding Expenditure by Way of Payment to Associations and Institutions for Carrying out Programmes of Conservation of Natural Resources Section 35CCB of Income Tax Act 1961

Introduction

In today’s world, where global warming and climate change are becoming increasingly alarming, there is an urgent need for conservation of natural resources. Many countries have recognized this and have implemented laws and regulations to promote conservation. In India, the Income Tax Act 1961 has a provision, Section 35CCB, which encourages expenditure by way of payment to associations and institutions for carrying out programmes of conservation of natural resources. This section provides tax benefits for companies or individuals who make such payments. In this blog, we will discuss Section 35CCB in detail, its provisions, benefits, and other relevant aspects.

What is Section 35CCB of the Income Tax Act 1961?

Section 35CCB of the Income Tax Act 1961 provides tax benefits to companies or individuals who make payments to associations and institutions for carrying out programmes of conservation of natural resources. This section was introduced by the Finance Act, 2016, and became effective from the assessment year 2017-18. The main objective of this section is to promote conservation of natural resources by incentivizing payments made to associations and institutions that work towards this cause.

Provisions of Section 35CCB

Section 35CCB has the following provisions:

Eligibility

To claim tax benefits under Section 35CCB, the following eligibility criteria must be met:

• The payment must be made to an association or institution that is approved by the National Biodiversity Authority or the Central Government.
• The association or institution must use the payment for carrying out programmes of conservation of natural resources.
• The payment must be made on or after 1st April 2016.

Nature of Expenditure

The expenditure made by way of payment to associations and institutions must be towards the following programmes of conservation of natural resources:

• Afforestation or tree plantation
• Conservation of natural forests and wildlife
• Protection of flora and fauna, including conservation of critically endangered species
• Agro-forestry and sustainable agriculture practices
• Protection of water resources, including watershed management
• Conservation of wetlands and mangroves
• Conservation of marine and coastal ecosystems
• Conservation of natural heritage sites, such as national parks and sanctuaries

Amount of Deduction

The deduction allowed under Section 35CCB is equal to the expenditure made by way of payment to associations and institutions for carrying out programmes of conservation of natural resources. The maximum deduction allowed is 100% of the amount paid. However, the payment must be made by a mode other than cash to claim the deduction.

Benefits of Section 35CCB

Section 35CCB provides the following benefits:

• Tax benefits: Companies or individuals who make payments towards conservation of natural resources can claim a deduction under Section 35CCB. This reduces their taxable income and hence, their tax liability.
• Promotion of conservation: Section 35CCB promotes conservation of natural resources by incentivizing payments towards this cause. This encourages companies and individuals to contribute towards conservation efforts.
• Social responsibility: Making payments towards conservation of natural resources is a sign of social responsibility. It demonstrates a company’s commitment to sustainability and environmental protection.

Frequently Asked Questions (FAQs)

1. Who is eligible to claim a deduction under Section 35CCB? Ans. Companies or individuals who make payments to associations and institutions for carrying out programmes of conservation of natural resources are eligible

2. What are the eligible programmes of conservation of natural resources under Section 35CCB? Ans. The eligible programmes include afforestation or tree plantation, conservation of natural forests and wildlife, protection of flora and fauna, agro-forestry and sustainable agriculture practices, protection of water resources, conservation of wetlands and mangroves, conservation of marine and coastal ecosystems, and conservation of natural heritage sites.

3. What is the maximum deduction allowed under Section 35CCB? Ans. The maximum deduction allowed is 100% of the amount paid.

4. Can payments made in cash be eligible for deduction under Section 35CCB? Ans. No, payments made in cash are not eligible for deduction under Section 35CCB. The payment must be made by a mode other than cash.

5. Is there a limit on the amount of expenditure that can be claimed as a deduction under Section 35CCB? Ans. No, there is no limit on the amount of expenditure that can be claimed as a deduction under Section 35CCB. However, the expenditure must be incurred towards eligible programmes of conservation of natural resources.

Conclusion

Section 35CCB of the Income Tax Act 1961 is an important provision that promotes conservation of natural resources by providing tax benefits for payments made towards this cause. The provision encourages companies and individuals to contribute towards conservation efforts, which is crucial in today’s world where environmental protection is of utmost importance. By incentivizing payments towards conservation, Section 35CCB promotes sustainability and social responsibility, and contributes towards a greener future.