NEW DELHI: Finance Minister Arun Jaitley is likely to provide tax incentives in Budget to encourage companies to participate in Swachh Bharat Abhiyan and Clean Ganga campaign as part of mandatory two per cent CSR spending."The Ministry is working on tax incentives for these two major schemes of the Narendra Modi government and some announcements are likely in the Budget," a source said.Jaitley is scheduled to present his first full fledged Budget on February 28.India Inc has been demanding that CSR spending be allowed as deduction or weighted deduction for the purpose of computing tax liability, the source added.Currently contributions to Prime Minister's National Relief Fund is allowed as 100 per cent deduction."The Budget is likely to outline the quantum of deduction which will be allowed for CSR spending in Swachh Bharat and Clean Ganga," the source said.Under the Companies Act, the companies are required to spend 2 per cent of their net profit on Corporate Social Responsibility (CSR) activities. But the Income Tax Act does not provide for any incentives for such expenditure.The companies are also required to disclose the CSR activities and the amount spent on it in their annual reports.The Budget for 2014-15 has clarified that the expenditure incurred on CSR activities is not for the purpose of business and hence cannot be allowed as deduction for computing tax liability of the company. However, deductions could be allowed for certain CSR activities, it had said."Tax deductibility of the CSR expenses is essential to encourage corporates to participate on a sustainable basis in government's social sector initiative through the CSR regulations," Nabin Ballodia, Partner Tax, KPMG India, said.In October 2014, the government widened the activities coming under CSR ambit and said contributions to 'Swachh Bharat Kosh' and 'Clean Ganga Fund' would be considered as social welfare spending work.'Swach Bharat Kosh' has been set up to attract funds from various entities, including corporates, for activities related to Swachh Bharat initiative. The 'Clean Ganga Fund' is aimed at pooling money for taking up works to clean the Ganga river.Swachh Bharat and Clean Ganga are among the major initiatives of the Modi government, which has embarked on a major drive to ensure cleanliness across the country.Certain class of profitable companies are required to shell out at least two per cent of their three-year average annual net profit towards CSR activities. The provision, part of the new Companies Act, came into force from April 1, 2014.These norms are applicable to companies having at least Rs 5 crore net profit, or Rs 1,000 crore turnover or Rs 500 crore net worth.Livelihood enhancement and rural development projects, working towards protection of national heritage, setting up public libraries, promotion and development of traditional arts and handicrafts, are among the activities coming under CSR ambit.