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

Meridian Pharma Ltd paid Rs. 8,00,000 in cash to a fund eligible under section 133(1)(a) as a whole-deduction donee. Under the Income-tax Act, 2025, what is the position on the deduction?

No deduction is allowed. Section 133(5) allows a deduction for a donation exceeding Rs. 2,000 only when it is paid by a mode other than cash, and the Rs. 8,00,000 was paid in cash, so it fails the condition regardless of the donee.

  1. AFull Rs. 8,00,000 is allowed because the donee is a whole-deduction fund
  2. BRs. 4,00,000 is allowed because cash donations get a 50% deduction
  3. CRs. 2,000 is allowed, being the cash limit
  4. DNo deduction is allowed because a donation over Rs. 2,000 must be made by a mode other than cashCorrect

Explanation

Section 133(5) allows a deduction for a donation over Rs. 2,000 only if it is paid by a mode other than cash. The nature of the donee does not remove this condition. The deduction is therefore disallowed, not partly allowed.

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