Corona Relief Fund should be treated as tax credit

CA. Chikkerur C R | Last updated: 29 May 2020

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This article suggests treating donations to a Corona Relief Fund as a tax credit to encourage public participation and provide essential government funding. The proposed system allows for tax credits on donations of Rs 20,000 or more, claimable over six years with potential additional relief, effectively reducing interest on advance tax payments and offering double savings. This approach aims to secure funds for coronavirus relief, offset GST and IT losses, and avoid external borrowing, fostering transparency and confidence in government initiatives.

The government is not powerful unless we make it. Govt needs money to provide relief to people from the impact of the coronavirus. I propose a suggestion to have a Corona Relief Fund and appeal for donation even Rs 1000. I also propose a new kind of tax credit for the next 6 years on this donation.

The Tax Credit can work on the following rules:

1. All money donated to Corona Relief Fund is Tax Credit. The amount must be Rs 20,000 or above. This will be shown Form 26AS,/AIS

2. Tax Credit can be claimed for Next 6 Years in equal installment or Rs 20,000 whichever is higher

3. Amount of Tax Credit -Nearly 16% pa will be treated as Advance tax by the people. It reduces nearly 3.67% interest under 234C and help

4. No refund is allowed. Unclaimed credit can be used next year.

5. 2%Tax relief will be claimed in Addition to above credit. Its double saving. -Avoiding Advance Tax interest+2% Relief -Nearly 6%Saving

Corona Relief Fund: Tax Credit Proposal for Donations

What Govt gets

1. Its gets money +Participation from people

2. It helps govt with money which they had lost GST+IT loss bcz of Corona

3 Avoids external borrowings

4. Even future tax flows are not going to affect

5. Technology helps to track donors and their credits. Brings transparency in govt too

6. People will help govt not as donation, but as tax credit. This mindset brings confidence on govt. It brings huge money.

(This suggestion is voluntary to help my govt with my CA Skill )

FAQ :

The main proposal is to treat donations made to a Corona Relief Fund as a tax credit, rather than a simple donation, to incentivise contributions.

The minimum donation amount to be eligible for the tax credit is Rs 20,000 or above.

The tax credit can be claimed over the next 6 years in equal installments or Rs 20,000, whichever is higher.

Donors can benefit from a tax credit of nearly 16% per annum, treated as advance tax, which reduces interest under section 234C. Additionally, a further 2% tax relief can be claimed, resulting in double savings.

The government receives much-needed funds, offsets GST and IT losses due to the pandemic, avoids external borrowings, and enhances transparency through technology to track donors and credits.

No, refunds are not allowed, but any unclaimed credit can be used in the following year.

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About the Author

CA. Chikkerur C R

PRACTICE

CA. Chidambar Chikkerur, B com, FCA, MBA DISA LLB. and recently completed Insolvency Exam in 2022. Presently Associate Partner in AAAIP Insolvency entity since Jan 2023. Based in Bangalore. Practicing Chartered Accountant I.my email id - chidu_11 @ yahoo.com Mobile # 98443 17480

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