Budget 2018: The union budget 2018 is extremely important for the Modi government as well as the country. This the first union budget after the implementation of last year’s iconic Goods and Services Tax (GST) and it is also the last full-fledged budget before the 2019 Lok Sabha elections. This budget holds very much important as it will be presented before the assembly elections in many states like Karnataka, Rajasthan and Madhya Pradesh. Hence the curiosity among the general populous of the country is very high. On January 18, the last GST council meeting will take place where GST rate cut on at least 70-80 items is expected. Hence, what will Finance Minister Arun Jaitley disclose from the iconic briefcase on February 1 is very much anticipated.
As far as, the corporates are concerned, every major business house is dedicatedly involved in various areas of social responsibility/community development as part of nation-building. The Companies Act, 2013, states that the corporates should spend at least 2 per cent of their average net profit on CSR activities. Although, the net profit has to be of the past three years. However, after the CSR became mandated, only 30 per cent of the companies met the criteria that are listed with the BSE. The recommendations to the finance minister Arun Jaitley is that in the upcoming union budget 2018, amendments made in Section 37 vide Finance (No. 2) Act, 2014 should be reconsidered.
As of now, in section 37 vide Finance (No. 2) Act, 2014 has made it clear that expenditure incurred on activities relating to CSR under Companies Act, 2013 will be deemed to be a non-business expenditure. It is requested by the Institute of Chartered Accountants of India (ICAI) pre-budget memorandum that providing suitable tax incentives in respect of such Corporate Social Responsibility Costs would accelerate the process and ensure that the country can reach the goal of being a developed nation in the near future and is the need of the hour.
As far as suggestions in the budget 2018 are concerned then, it is requested that deduction of the expenditure on community/social development, with respect to both capital expenditure and revenue expenditure is concerned, should be introduced. The deduction in expenditure should cover critical areas like education, health, animal husbandry, water management, women empowerment, poverty alleviation and rural development.
The ICAI memorandum also made suggestions in the cases where a company has its own trust or foundation. It stated that the deduction in respect of expenditure incurred for CSR activities should be allowed. CSR expenditure is allowed by way of donation to Prime Minister Relief Fund/ Trust registered u/s. 80G/ associations approved u/s. 35AC. If the deduction of CSR expenditure is not allowed, this shall be discriminatory for those corporates, who may like to carry out CSR activities on their own.