Deduction for expenditure on Agricultural Extension Project and skill development project

Introduction

The deduction under section 47 is allowed when a company incurs expenditure on notified Agricultural Extension Project and skill development project. The amount of deduction shall be 100% of the actual expenditure.

1. About

1.1. Agricultural Extension Project

(a) Who can claim deduction?

An assessee, who undertakes a project for training, education, and guidance of farmers, can claim deduction under this provision. The deduction is allowed in respect of notified projects which have been approved by MoA

(b) How much deduction is allowed?

The deduction shall be allowed 100% of the actual expenditure.

Where any deduction is claimed and allowed for any assessment year, in respect of the aforesaid expenditure, no deduction is allowed in respect of such expenditure under any other provisions of this Act either for the same year or any other year.

(c) Conditions for claiming deduction

       Main article: Guidelines for approval of Agricultural Extension Project

To get an agricultural extension project notified, an assessee is required to furnish  an application electronically to the Member (IT), CBDT in Form 20 accordance with the guidelines prescribed under Rule 37. Further it needs to fulfil certain conditions such as maintenance of books of accounts and get them audited.

1.2. Skill Development Project

(a) Who can claim deduction?

A company engaged in manufacture or production of any article or thing (not being alcoholic spirits and tobacco products) or a company engaged in providing specified services can claim the deduction under this provision. This deduction is available when a company incurs any expenditure (not being expenditure in the nature of cost of any land or building) on any notified skill development project.

The skill development project should be undertaken in separate facilities in a training institute which is:

(a) Set up by Central Government, State Government or Local Authority;

(b) Affiliated to State Council for Vocational Training;

(c) Affiliated to (or approved or empanelled by) the National Council for Vocational Education and Training;

(d) Affiliated to (or approved or empanelled by) the Central Government and certified by the National Council for Vocational Education and Training as having training standards equivalent to training institutes affiliated to the National Council for Vocational Education and Training; or

(e) Affiliated to (or approved or empanelled by) the State Government and certified by the National Council for Vocational Education and Training or a State Council for Vocational Training as having training standards equivalent to training institutes affiliated to the National Council for Vocational Education and Training or the State Council for Vocational Training, as the case may be.

Further, the skill development project should provide training to potential employees or newly recruited employees. Skill development of existing employees of the company shall not be eligible for this deduction, if training of employees commences after six months of their recruitment

The company undertaking skill development project shall be required to maintain separate books of account of the project notified under this provision and get such books of account audited.

(b) How much deduction is allowed?

100% of the actual expenditure shall be allowed as a deduction in the tax year in which it is incurred. However, where any deduction is claimed and allowed for any tax year, in respect of the aforesaid expenditure, no deduction is allowed in respect of such expenditure under any other provisions of this Act either for the same year or any other year.

(c) Conditions for claiming deduction

            Main article: Guidelines for approval of Skill Development Project

To get a skill development project notified, an eligible company is required to make an application to the National Skill Development Agency in Form 22 in accordance with the guidelines prescribed under Rule 39. Further, it needs to fulfil certain conditions such as maintenance of books of accounts and get them audited.

References

Ministry of Agriculture, Government of India

Press Release, Dated 18-7-2013

This article is general information and not tax advice. Provisions change. Confirm your position with a qualified professional before acting.