Meta Title: Section 35 Explained: Income Tax, IPC, IBC & GST
Meta Description: A complete, human-friendly guide to Section 35 covering income tax deductions, Section 35CCC, IPC intent, IBC provisions, and GST relevance.
URL Slug: section-35-income-tax-ipc-ibc-gst-explained
Section 35: A Complete, Practical Guide You Can Actually Understand
If you’ve ever typed “section 35” into Google, you probably noticed something interesting. The search results don’t point to just one law. Instead, they branch out into income tax, criminal law, insolvency law, GST, and even the Arms Act.
That’s because section 35 is not one single concept. It appears in multiple Indian laws, each with a completely different meaning.
And this is where confusion starts.
I’ve seen taxpayers, business owners, students, and even professionals mix up Section 35, Section 35CCC of the Income Tax Act, and Section 35 of the IBC, assuming they are somehow connected. They are not.
Why Section 35 Is So Commonly Searched
The reason Section 35 shows up everywhere is simple:
Different laws use the same section number for completely different purposes.
Most commonly, section 35 refers to:
- Deduction for Scientific Research under the Income Tax Act
- Shared criminal intent under the Indian Penal Code (IPC)
- Record-keeping and professional standards under GST
- Obligations under insolvency law (section 35 of ibc)
- Liability concepts under special laws like the Arms Act
Let’s break each one down clearly.
Section 35 Under the Income Tax Act (Scientific Research Deduction)
When tax professionals talk about Section 35, they are usually referring to the Indian Income Tax Act’s deduction for scientific research expenditures (encouraging R&D).
This provision exists for one simple reason:
👉 The government wants Indian businesses to invest in research, innovation, and development.
What Exactly Is Section 35 in Income Tax?
Under section 35, businesses can claim deductions for money spent on scientific research related to their business.
This includes:
- In-house research & development
- Payments to approved research institutions
- Contributions to scientific research associations
- Development of new products or processes
The idea is to reduce the tax burden for businesses that invest in long-term innovation.
Who Can Claim Deduction Under Section 35?
You can claim a deduction under section 35 if:
- You are carrying on a business (not salary income)
- The research is related to your business
- The expense is revenue or capital in nature (with conditions)
Even startups and manufacturing units often miss this benefit simply because they don’t understand it properly.
Types of Expenses Covered Under Section 35
Here’s where it gets practical.
1. Revenue Expenditure
- Salaries of R&D staff
- Raw materials used in experiments
- Utilities used for research
These are usually 100% deductible.
2. Capital Expenditure
- Equipment used for research
- Machinery used exclusively for R&D
Land is excluded, but most other capital costs qualify.
Real-Life Example of Section 35 (Income Tax)
Let’s say a pharmaceutical company spends ₹40 lakh on developing a new formulation.
This includes:
- ₹25 lakh on salaries and consumables
- ₹15 lakh on lab equipment
Under section 35, the company can claim deduction for these expenses, reducing taxable profits significantly.
This is why section 35 is such a powerful tax planning tool when used correctly.
Section 35CCC of Income Tax Act (A Less-Known but Powerful Deduction)
Now let’s talk about a specific and often misunderstood provision: section 35ccc of the Income Tax Act.
This section does not deal with laboratory research or manufacturing innovation.
Instead, it focuses on agricultural extension and skill development.
What Is Section 35CCC of the Income Tax Act?
Under section 35CCC of the Income Tax Act, a deduction is allowed for expenditure incurred on:
- Agricultural extension projects
- Skill development projects
- Rural and farmer-focused training initiatives
The goal here is social development, not product innovation.
Who Benefits From Section 35CCC?
This section mainly benefits:
- Companies working with farmers
- Agri-based businesses
- NGOs and institutions involved in agricultural education
- Corporates funding approved skill programs
If your business is involved in agriculture-related capacity building, section 35CCC of the Income Tax Act can be extremely valuable.
Why Many People Miss This Deduction
From experience, most people miss section 35ccc of the Income Tax Act because:
- It’s not discussed like other popular sections
- Approval requirements are misunderstood
- Documentation is often weak
But when structured correctly, it can significantly reduce tax liability while creating social impact.
Section 35 Under IPC: Shared Criminal Intent
Now let’s shift gears completely.
In criminal law, section 35 has nothing to do with tax or deductions.
Under the Indian Penal Code, section 35 deals with shared criminal intent.
Meaning of Section 35 in IPC
Under IPC, section 35 states that:
When a criminal act is done by several persons, each person who joins with knowledge or intention is liable.
In simple terms:
- If multiple people commit an act together
- And they know what they are doing
- Each person is responsible for the outcome
This principle is often used along with sections on conspiracy or joint liability.
Simple Example to Understand IPC Section 35
Suppose three people plan and execute a robbery together.
Even if:
- One person doesn’t directly steal
- Another doesn’t carry the weapon
Under section 35, all of them can be held responsible because the act was done with shared intent.
This is why section 35 in IPC is so important in criminal cases.
Section 35 of IBC: Role of the Resolution Professional
Let’s now come to corporate insolvency.
Under the Insolvency and Bankruptcy Code, section 35 of the IBC defines the powers and duties of the liquidator.
This section becomes relevant once a company enters liquidation.
What Does Section 35 of the IBC Say?
Under section 35 of the IBC, the liquidator is empowered to:
- Take custody of company assets
- Carry on business if required for beneficial liquidation
- Sell assets through auction or private sale
- Investigate past transactions
- Recover dues from debtors
In short, section 35 of the IBC gives operational authority to the liquidator.
Why Section 35 of IBC Is Critical
From a practical standpoint, section 35 of the IBC ensures:
- Transparency in liquidation
- Protection of creditor interests
- Orderly winding-up of companies
Without this section, insolvency proceedings would lack structure and accountability.
Section 35 and GST: Accounting & Records
Although GST law doesn’t make Section 35 as famous as income tax or IPC, it still plays a crucial role.
Under GST, section 35 primarily deals with:
- Maintenance of accounts
- Record keeping
- Audit and verification requirements
What Businesses Must Do Under GST Section 35
Businesses are required to:
- Maintain books of accounts at the principal place of business
- Keep records of stock and inward and outward supplies
- Retain records for the prescribed period
Non-compliance can lead to penalties, even if the tax payment is correct.
This is why section 35 under GST is often discussed during audits.
Section 35 Under Arms Act (Brief Mention)
Under special laws like the Arms Act, section 35 generally deals with
- Liability of individuals present during an offence
- Presumption of involvement under specific circumstances
While not commonly encountered, it reflects the same principle seen in IPC—shared responsibility.
Why Understanding the Context of Section 35 Matters
Here’s the most important takeaway.
Whenever someone says “section 35,” the first question should be:
Which law are we talking about?
Because:
- section 35 under income tax = deduction
- section 35ccc of the Income Tax Act = agricultural extension
- section 35 under IPC = shared intent
- section 35 of the IBC = liquidation powers
- section 35 under GST = records & compliance
Same number. Completely different meanings.
Common Mistakes People Make With Section 35
Based on real cases, these mistakes happen often:
- Claiming tax deduction without understanding eligibility
- Mixing up section 35ccc of the Income Tax Act with scientific research
- Assuming IPC section 35 is about punishment (it’s about liability)
- Ignoring section 35 of ibc obligations during liquidation
- Poor GST record maintenance under section 35
All of these can be avoided with basic clarity.
Practical Tips Before Using Any Section 35 Benefit
Before you apply or rely on section 35, always:
- Check which Act applies
- Read the eligibility conditions carefully
- Maintain proper documentation
- Seek professional advice for interpretation
This single habit can save you years of litigation or tax trouble.
Final Thoughts: One Section, Many Meanings
Section 35 is a perfect example of why Indian law feels confusing—not because it’s illogical, but because context matters.
Most commonly, it refers to:
- Indian Income Tax Act's deduction for Scientific Research expenditures (encouraging R&D)
- But it also covers IPC shared criminal intent, GST accounting, Arms Act liability, and section 35 of IBC.
Once you understand which law you’re dealing with, everything becomes much simpler.
If you need help claiming deductions, handling GST compliance, or understanding insolvency or tax law provisions, professional guidance makes all the difference.
For expert support, accurate advice, and end-to-end compliance help, visit callmyca.com.
