CBDT grants Section 35(1)(ii) recognition to Tea Research Association: implications for donors and compliance

The Central Board of Direct Taxes (CBDT) has formally recognised Tea Research Association, Kolkata, as an approved “Research Association” for the purposes of scientific research under Section 35(1)(ii) of the Income Tax Act 1961. This recognition, granted through Notification No. 24/2026 dated 20 March 2026, opens the door for donors to claim deductions on contributions made to the Association, subject to fulfilment of prescribed statutory conditions.

This development aligns with the policy intent of incentivising organised, audited and transparent scientific research in India, while simultaneously ensuring robust reporting of donations and related tax benefits.

The approval is rooted in the combined operation of Section 35(1)(ii) of the Income Tax Act 1961 and Rules 5C and 5D of the Income-tax Rules 1962.

  • Section 35(1)(ii) allows deduction of expenditure incurred by an assessee by way of payment to an approved research association engaged in scientific research.
  • Rule 5C and Rule 5D prescribe conditions, procedures and monitoring mechanisms for granting and continuing such approval.

Under Notification No. 24/2026 – Income Tax | S.O. 1491(E) | Dated 20th March 2026, the Central Government, acting through CBDT, has:

  • Approved “Tea Research Association” (PAN: AAAAT3430E), Kolkata, West Bengal
  • Categorised it as a “Research Association” for “Scientific Research”
  • Confirmed the approval specifically under Section 35(1)(ii) read with Rules 5C and 5D

Period of validity: Assessment Years 2027-28 to 2031-32

The notification is time-bound and is expressly applicable for the following period:

  • From: Assessment Year 2027-28
  • Up to and including: Assessment Year 2031-32

Note: Donations made in the relevant previous years corresponding to these Assessment Years can potentially qualify for deduction under Section 35(1)(ii), provided all statutory conditions—both for the donor and for the Tea Research Association—are complied with.

Any assessee intending to claim deduction for contributions to Tea Research Association must therefore ensure that:

  1. The donation falls within the eligible financial years related to the above Assessment Years, and
  2. All documentation and reporting requirements (both by the donor and the Association) are duly met.

Key conditions attached to the approval

The approval is not unconditional. It is explicitly subject to certain compliance obligations laid down in the Income-tax Rules 1962, particularly Rule 5D and Rule 18AB. The notification highlights the following core conditions:

1. Compliance with Rule 5D of the Income-tax Rules 1962

The first and foremost condition imposed is that:

‘Tea Research Association’, Kolkata, West Bengal shall comply with the conditions specified in Rule 5D of the Income-tax Rules, 1962.

Rule 5D broadly lays down conditions for:

  • Application of income towards the approved scientific research objects
  • Proper maintenance of books of account and audit
  • Restrictions on how funds and donations may be utilised
  • Furnishing of specified information to the income-tax authorities

Failure to comply with Rule 5D can result in:

  • Withdrawal or non-renewal of approval under Section 35(1)(ii)
  • Possible denial of deduction to donors for future contributions
  • Scrutiny of earlier years’ benefits already claimed

2. Filing of annual donation statement in Form No. 10BD

The second condition requires Tea Research Association to undertake centralised reporting of all donations received that are intended to support deduction claims under Section 35(1)(ii).

The notification provides: