Contribution to Patanjali Research Foundation to get tax exemption

The Income Tax Department has notified five years exemption for Patanjali Research Foundation Trust, based in Haridwar (Uttarakhand).

“The Central Government hereby approves M/s Patanjali Research Foundation Trust, Haridwar under the category ‘Research Association’ for Scientific Research for the purposes of clauses (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 read with rules 5C and 5D of the Income-tax Rules, 1962,” a notification dated July 12, issued by the Central Board of Direct Taxes (CBDT), said.

It will apply with effect from the date of publication in the Official Gazette (i.e from the previous year 2021-22) and accordingly shall be applicable for Assessment Year(s) 2022-23 to 2027-28.

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Research activities

Section 35 of the Income Tax Act allows deduction of expenditure “an amount equal to one-and-one- half times of any sum paid to a research association which has as its object the undertaking of scientific research or to a university, college or other institution to be used for scientific research.” Rule 5C of Income Tax Rules 1962 prescribes form and manner for deduction.

Rule 5D prescribes conditions for the approval. For this, the sole object will be to undertake scientific research or research in social science or statistical research. The research activity should be carried by research association itself. It will maintain books of account and get such books audited by an accountant as defined under the law and submit to the Income Tax Department. It will maintain a separate statement of donations received and amount applied for research.

It will also need to submit a detailed note on the research work undertaken by it during the previous year, a summary of research articles published in national or international journals during the year, any patent or other similar rights applied for or registered during the year and programme of research projects to be undertaken during the forthcoming year and the financial allocation for such programme.

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Commenting on the notification, Neha Malhotra, Director at Nangia Andersen LLP said that in computing the income under head business and profession, a taxpayer is permitted to deduct any amount paid to an ‘approved scientific research association’ for undertaking scientific research. Accordingly, a business entity that pays any amount to the Patanjali Foundation for scientific research shall be eligible to claim the said expense as deduction from business income thereby reducing their tax outgo.

“Tax breaks in the form of deduction of expenses incurred for specified purposes, channelises the funds of the taxpayers in the desired area of investment, that is scientific research in this case. Such provisions serve as tax incentive for the taxpayer spending on scientific research and source of funds for the research association,” she said.

According to the website of research firm, Patanjali Research Foundation Trust has invested significantly in Patanjali Research Institute to create a world-class research institute , backed up with advanced scientific technology and a team of qualified scientists. The institute was inaugurated by Prime Minister Narendra Modi on May 3, 2017.

The website also mentioned that Swami Ramdev and Acharya Balkrishna — two persons behind Patanjali — recognised the need for scientific evidence-based research using advance research methodology for acceptance of Ayurveda worldwide.

On Tuesday, Balkrishna said that more than 500 research papers have been published in international journals with high citation. Also, 100 evidence-based drugs have been developed.