Political Contribution

1) Which political parties is cover under section 13A of income tax act?

  • Income tax act does not cover all political parties, only those parties which are cover under under Representation of people act, 1951 are termed as political parties in income tax act.

2). What is the taxability criteria of political parties?

  • Section 13A of income tax act provide 100% tax benefit to political parties for the income earned by them through house property, income from other sources,capital gains and voluntary contribution received, subject to compliance of various condition.

3) When does the benefit of section 13A will be applicable?

  • Political parties to enjoy benefit of section 13A must fulfill following applicable conditions:-
    • a. Such political parties must be registered under section 29A 1951.
    • b. Political Parties must maintain such number of books of account sa as its income can be derived by assessing officer.
    • c. Political Trust must maintain proper records of all such person who had donated sum total of RS 20000 or more.However such need will not arise when contribution is made through “Electrol Trust”.
    • d. The books of account of such political parties must be Audited by “Chartered Accountant”.
    • e. Donation over and above the sum of RS 2000 must be made through account payee cheque demand draft or electronic verification system.
    • f. Treasurer of political parties will have to prepare report of donation and liable to submit such report before the due date of filling Return.

4) When does a political parties is liable to file return? If yes then,Who is responsible to file Return of political Parties?

  • Political parties are liable to file ITR when there income before claiming section 13A will be more than “basic exemption limit” applicable to resident individual.
  • Return of political parties must be filed and verify by chief executive officer of the political parties.

5) Under which form of ITR political parties are liable to disclose there income?

  • Political parties are liable to disclose there income under ITR-7, ITR -7 will also comprise following details :-
    • a. Balance Sheet of such political Parties.
    • b. Income and Expenditure Account of the political party for such Financial Year.
    • c. Contribution List comprises details of Donation received by such political party in an year.

6) What are the benefit of Donation to political party or what are the tax exemption to the donor of the political party?

  • The donor to political parties can claim benefit under two section in income tax act;-
    • a. Corporate Donor:- Corporate donor of political parties can claim benefit of section 80GGB.
    • b. Other donor( except local authority and artificial judicial person wholly or partly funded by Government) can claim benefit of there donation u/s 80GGC.