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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Corporate Tax Planning

Meridian Pharma Ltd paid Rs. 5,00,000 in cash to a fund eligible for a deduction under section 133 of the Income-tax Act, 2025, to meet a board-approved donation target before year end. How does the Act treat this claim?

The claim is disallowed. Section 133(5) permits a deduction for a donation above Rs. 2,000 only when paid by a mode other than cash, so a Rs. 5,00,000 cash payment does not qualify, whatever the eligibility of the recipient.

  1. AFully allowed because the recipient is eligible
  2. BAllowed only to the extent of Rs. 2,000
  3. CDisallowed because a donation over Rs. 2,000 must be paid by a mode other than cashCorrect
  4. DAllowed at 50% because cash payments are halved

Explanation

Section 133(5) allows a deduction for a donation exceeding Rs. 2,000 only if paid by a mode other than cash. Since Rs. 5,00,000 was paid in cash, the claim fails. There is no provision for partial allowance of Rs. 2,000 or a halving of the claim.

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