Taxation Of Political Parties

Taxation Of Political Parties


Taxation Of Political Parties

Political parties are given Tax Exemption of the income earned by them under section 13A of Income Tax Act, 1961. Following income earned by the parties are not included in Total Income:

  • Income from House Property
  • Income from other Sources
  • And Income under the head Capital Gain
  • Income by way of Voluntary Contribution i.e. Donations.

“It may be carefully noted that the above list do not include income from BUSINESS”

To get the exemption of this section the following conditions shall be fulfil.

  • Political party keeps and maintains such books of accounts and other documents as would enable the assessing officer to properly deduce the income therefrom.
  • In respect of each such voluntary contribution in excess of twenty thousand rupees, such political party keeps and maintains a record of such contribution and the name and address of the person who has made such contribution. Note that, no details are required to be maintained if the donation is received from electoral trust.
  • The accounts of such political party should be audited by the Chartered Accounatnt.
  • No donation is received by said political party in excess of Rs 2,000otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account or through electoral bond (that is, cash donation in excess of Rs 2000 is not allowed) (wef A.y 2018-19).
  • The political party shall file the return of income for the previous year in accordance with the provisions of Sec 139(4B) or before the due date under section 139(1).
  • It shall submit the report as required by section 29C of Representation of People Act

Over and above the exemption to the political party. The donor is also eligible for any donations made to political party otherwise than by cash u/s 80GGB/GGC i.e. double benefit.