What changed
The earlier circular dated April 7, 2005 used 'and' between Section 80G and Section 35(1)(ii)/(iii), implying institutions needed both certificates. This correction replaces 'and' with 'or', meaning institutions need only one of these certificates to be eligible.
What it means for you
Banks and authorized dealers must now accept investment applications from charitable institutions holding either a Section 80G certificate or a Section 35(1)(ii)/(iii) certificate, not both. This widens the eligible pool of investors for the 8% Savings (Taxable) Bonds, 2003 scheme, potentially increasing demand.
What you must do
- Update internal eligibility checklists for 8% Savings Bonds to reflect 'OR' condition between Section 80G and Section 35(1)(ii)/(iii) certificates.
- Re-verify any pending or rejected applications from charitable institutions that were declined due to the earlier 'AND' interpretation.
- Communicate this correction to all relevant branches and investment processing teams handling bond subscriptions.
Who it affects
State Bank of India and associate banks, 17 nationalised banks, 4 private sector banks, SHCIL (Stock Holding Corporation of India Limited), Charitable institutions applying for 8% Savings (Taxable) Bonds, 2003
What changed in the eligibility criteria for charitable institutions?
The earlier circular required both Section 80G and Section 35(1)(ii)/(iii) certificates. This correction now requires only one of these certificates.
Does this affect investments already made under the earlier interpretation?
The circular does not address past investments. It only corrects the eligibility condition going forward. Banks should apply the corrected rule to new applications.
Which institutions are covered by Section 35(1)(ii)/(iii)?
These sections cover institutions approved for scientific research or social science research. The circular does not list specific institutions but refers to the Income Tax Act provisions.