Section 45(3)(a) of the Income Tax Act, 2025 provides a deduction for sums paid to research associations, Universities, colleges, or other institutions approved for scientific research. Section 45(4) specifies the approval process, conditions, and grounds for withdrawal. Understanding these provisions is essential for research associations seeking approval and for donors claiming deductions.
The Scope of the Provision
Section 45(3)(a) allows deduction for sums paid to【32†L3-L4】:
- Research association: Having the object of undertaking scientific research
- University, college, or other institution: Approved for the purposes of scientific research
- Research association for social science: Having the object of undertaking research in social science or statistical research
The deduction is available only if the recipient is approved by the Central Government.
Approval Process
Application
An application for approval under Section 45(4)(b) shall be made in Form No. 17 to the Commissioner of Income-tax having jurisdiction over the applicant【32†L3-L5】. The application may be made:
- At any time during the financial year immediately preceding the tax year from which approval is sought【32†L5-L6】
- Where approval is sought from the tax year 2026-27, at any time during the said tax year【32†L7-L9】
- Where approval is sought from the tax year in which the applicant is incorporated, at any time during the said tax year【32†L7-L9】
Scrutiny
If the application is complete in all respects, the Commissioner of Income-tax may make such inquiry as he may consider necessary regarding the genuineness of the activity and send his recommendation to the Member (IT), CBDT for grant of approval or rejection of the application before the expiry of the period of three months from the end of the quarter in which the application was received in his office【32†L63-L66】.
Approval
The Central Government shall issue a notification under Section 45(4)(b) or pass an order rejecting the application within twelve months from the end of the quarter in which such application was received in the office of Member (IT), CBDT【32†L24-L26】.
Validity
Any notification issued by the Central Government shall, at any time, have effect for such tax year or years, not exceeding five tax years as may be specified in such notification【32†L28-L30】.
Renewal
The applicant may, at least three months before the expiry of the effective period of the notification, make a fresh application【32†L79-L80】.
Conditions for Approval
Sole Object
The sole object of the applicant research association shall be to undertake scientific research or research in social science or statistical research, as the case may be【33†L3】.
Research Activity
The applicant research association shall carry on the research activity by itself【33†L5】.
Maintenance of Books of Account
The research association shall maintain books of account【33†L7-L8】.
Audit
The books shall be audited by an accountant and the report of such audit shall be furnished to the Commissioner of Income-tax having jurisdiction over the research association, by the due date of furnishing the return of income under section 263(1)【33†L9-L11】.
Statement of Donations
The research association shall maintain a separate statement of donations received and amount applied for scientific research or research in social science or statistical research. A copy of such statement duly certified by the auditor shall accompany the report of audit【33†L13-L15】.
Annual Statement
The research association shall, by the due date of furnishing the return of income under section 263(1), furnish a statement to the Commissioner of Income-tax containing【33†L17-L29】:
- A detailed note on the research work undertaken during the tax year
- A summary of research articles published in national or international journals
- Any patent or other similar rights applied for or registered
- Programme of research projects to be undertaken during the forthcoming tax year and the financial allocation
Grounds for Withdrawal
The Central Government may withdraw approval if【32†L69-L73】:
- The research association has ceased its activities
- Its activities are not genuine
- Its activities are not being carried out in accordance with all or any of the conditions
Procedure for Withdrawal
No order treating the application as invalid, or rejecting the application or withdrawing the approval, shall be passed without giving a reasonable opportunity of being heard【32†L75-L76】.
Communication
A copy of the order invalidating or rejecting the application or withdrawing the approval shall be communicated to【32†L77-L78】:
- The applicant
- The Assessing Officer
- The Commissioner of Income-tax having jurisdiction over the applicant
Expert Legal Guidance
Understanding the approval process and conditions for research associations is essential for both associations seeking approval and donors claiming deductions. Anuj Desai & Associates provides expert advisory services on Direct Tax Code compliance, helping research associations navigate the approval process and maintain compliance.