Income Tax Act

## Policy Analysis Report: Income-tax Act, 1961 - Amendment Regarding Sri Shankara Cancer Foundation **1. Executive Summary:** This report analyzes a notification from the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes (CBDT) pertaining to an amendment under the Income-tax Act, 1961. The notification approves Sri Shankara Cancer Foundation, Bangalore, as an eligible institution for scientific research under Section 35(1)(ii) of the Act, read with Rules 5C and 5E of the Income-tax Rules, 1962. This approval grants donors to the foundation eligibility for tax deductions. The amendment is effective retrospectively from the Previous Year 2021-22 and applies to Assessment Years 2022-2023 to 2026-2027. **2. Introduction:** This report provides an overview and analysis of Notification No. 14/2022, issued by the Central Board of Direct Taxes (CBDT) regarding the approval of Sri Shankara Cancer Foundation under the Income-tax Act, 1961. The analysis is based solely on the provided text of the notification. **3. Policy Overview:** * This notification is an amendment to the existing framework of the Income-tax Act, 1961 and the Incometax Rules, 1962, specifically relating to provisions for deductions on donations made for scientific research. * **Core Objective:** The primary objective, as inferred from the text, is to officially recognize Sri Shankara Cancer Foundation as an eligible institution for scientific research, thereby enabling donors to claim tax deductions under Section 35(1)(ii) of the Income-tax Act, 1961. **4. Background and Rationale:** * This amendment appears to address the need to formally recognize Sri Shankara Cancer Foundation's eligibility for receiving tax-deductible donations related to scientific research. The existing framework of the Income-tax Act requires specific approval and notification for institutions to qualify for this status. This amendment formally grants that approval, suggesting that the foundation has met the necessary criteria for recognition as an institution involved in bonafide scientific research. **5. Key Provisions / Changes:** * **Specific Part of Original Policy Changed:** This amendment does not explicitly modify the wording of the original Act or Rules. Rather, it implements existing provisions. The key change lies in the *application* of Section 35(1)(ii) to a specific entity: Sri Shankara Cancer Foundation. * **New Rule/Provision:** The amendment approves Sri Shankara Cancer Foundation, Bangalore (PAN: AAHTS5593F) under the category of "University, College or other institution for Scientific Research" for the purposes of clause (ii) of subsection (1) of section 35 of the Income-tax Act, 1961. * **Difference/Effect of Change:** The effect of this change is that donations made to Sri Shankara Cancer Foundation for scientific research are now eligible for tax deductions under Section 35(1)(ii) of the Income-tax Act, 1961, within the specified assessment years. Prior to this notification, donors to the foundation would not have been able to claim these deductions. **6. Target Audience and Stakeholders:** The primary target audience and stakeholders are: * **Sri Shankara Cancer Foundation:** The foundation benefits directly from this amendment as it enhances its ability to attract donations by offering donors tax benefits. * **Donors to Sri Shankara Cancer Foundation:** Individuals and organizations who donate to the foundation for scientific research purposes are now eligible for tax deductions. * **The Income Tax Department:** This agency is responsible for administering and enforcing the provisions related to tax deductions for donations. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The Central Board of Direct Taxes (CBDT), under the Ministry of Finance, is the responsible agency for issuing and implementing this notification. * **Timelines/Procedures:** The amendment is effective retrospectively from the Previous Year 2021-22 and applies to Assessment Years 2022-2023 to 2026-2027. This means that donations made during the Previous Year 2021-22 can be claimed as deductions for the Assessment Year 2022-2023. The notification is effective from the date of its publication in the Official Gazette, which is March 3, 2022. **8. Expected Outcomes / Impact of Changes:** The intended outcome of this amendment is likely to: * **Increase donations to Sri Shankara Cancer Foundation:** By providing tax benefits to donors, the amendment is expected to incentivize charitable giving to the foundation, supporting its scientific research activities. * **Promote scientific research:** Increased funding for Sri Shankara Cancer Foundation is expected to contribute to the advancement of scientific research in the field of cancer. * **Enhance transparency and accountability:** Formal recognition under the Income-tax Act may also lead to increased scrutiny and accountability regarding the use of donated funds. **9. Conclusion:** The notification analyzed represents an amendment to the Income-tax Act, 1961, specifically approving Sri Shankara Cancer Foundation as an eligible institution for scientific research for tax deduction purposes. This change benefits the foundation by making it more attractive to donors and potentially boosting its research funding. The retrospective application ensures that donations from the Previous Year 2021-22 onwards are eligible for tax benefits, making this a significant development for the foundation and its supporters.

Key Entities Referenced