Central Government Approves Krea University for Income Tax Research Benefits

The Ministry of Finance, Department of Revenue, through the Central Board of Direct Taxes, issued Notification S.O. 5070(E) on October 28, 2022, formally approving Krea University, located in Sricity, Chittoor, Andhra Pradesh, for specific research purposes. This notification was issued in exercise of the powers conferred by clause (iii) of sub-section (1) of section 35 of the Income-tax Act, 1961, read in conjunction with Rules 5C and 5E of the Income-tax Rules, 1962. The approval designates Krea University under the category of 'University, College or other institution' specifically for conducting research in 'Social science or Statistical research'. The primary legal consequence of this approval is to enable entities making contributions to Krea University for these specified research areas to avail deductions under the relevant provisions of the Income-tax Act. The notification came into force upon its publication in the Official Gazette on October 28, 2022, and its provisions are applicable from the Previous Year 2022-23, extending to the Assessment Years 2023-2024 through 2027-2028.

The legislative intent behind such notifications is to foster and encourage scientific research, including social science and statistical research, within India by providing tax incentives for contributions made to approved institutions. The Income-tax Act, 1961, already establishes a framework under Section 35(1)(iii) that allows for deductions of sums paid to universities, colleges, or other institutions approved by the Central Government for carrying out research in social science or statistical research. This notification serves to operationalize that provision by specifically identifying and adding Krea University to the list of eligible institutions. The earlier legal position provided the general framework for such deductions, and this notification addresses the administrative requirement of formally approving specific institutions, thereby expanding the scope of entities whose research contributions qualify for tax benefits. The policy rationale is rooted in promoting academic and scientific advancement, recognizing that financial support through tax deductions can stimulate investment in critical research areas. The notification provided: “the Central Government hereby approves 'Krea University, Sricity, Chittoor, A.P. (PAN: AAFAK4100P)' under the category of 'University, College or other institution' for research in 'Social science or Statistical research' for the purposes of clause (iii) of sub-section (1) of section 35 of the Income-tax Act, 1961 read with rules 5C and 5E of the Income-tax Rules, 1962.” An explanatory memorandum accompanying the notification certified that no person would be adversely affected by the retrospective application of this notification, indicating that its effect from the Previous Year 2022-23 is intended to be beneficial for eligible taxpayers and the approved institution.

Keywords: Income Tax Act, Krea University, Research, Tax Benefits, Notification, Central Board of Direct Taxes, Social Science, Statistical Research, Section 35(1)(iii)

Geo Tags: India, Andhra Pradesh District: Chittoor