IT Exemption for Disability projects

The Finance Ministry has issued a notification that extends income-tax incentives for any government-approved project or scheme for relief and rehabilitation of handicapped individuals.

Following the amendments to the rules, an assessee donating a sum of money to an approved institution for use in a project for relief and rehabilitation of handicapped individuals would be able to claim 100 per cent tax exemption for the amount donated.

The notification was issued on May 7, 2002, according to a press release issued by the Times News Network. This amendment modifies Rule 11K of the Income Tax Rules, 1962, so as to include within the 'eligible projects or schemes', projects for relief and rehabilitation of handicapped individuals. Rule 11K gives the guidelines or rules defining 'Eligible project'. Tax exemption can be claimed for donations for only such 'eligible' projects approved by the Central government.

The donations, in order to be tax exempt in this context, would have to be to a local authority, public sector undertaking, association or institution approved by the National Committee under section 35AC of the Income Tax Act for the setting up/operation of such 'eligible projects'.