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Whether Political Party is Liable for Tax or Not | Taxation of Political Party | Tax-India.in

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Namashkar Dosto, In this article we are taking about The Taxation of Political Party. Normally, Income of Political Party is Not Liable for tax but When Political Party is doing some Business and Profession and earned income from Business and Profession and getting Salary than it is may be Liable for Tax. For Simplicity Income Assessable under the head of PGBP is Taxable.
Whether Political Party is Liable for Tax 2

According to section 13A of the Income Tax Act,1961 Following Income of Political Party
Is Exempt.

  1. Income from House Property
  2. Capital Gains
  3. Income from Other Sources
  4. Voluntary Contributions Received

The above exemption shall be available subject to following conditions:

  1. The Political party keeps and maintains such books of Account and other Documents as would enable the Assessing Officer to properly deduce its income therefrom.
  2. The accounts of such political party are Audited by an Accountant as defined in the Explanation below sub-section (2) of section 288.
  3. In respect of each voluntary contribution, other than contribution by way of electoral bond, in excess of 20,000, such political party keeps and maintains a record of such contribution and the name and address of the person who has made such contribution.
  4. No donation exceeding 2,000 is received by such political party otherwise than by an A/c payee Cheque drawn on a bank or an A/c payee bank draft or use of ECS through a bank account or through electoral bond.

NOTES

  • It’s means if Donations exceeding 2,000 should be received by the Political Party otherwise 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 than it is Taxable. (Cash Donation exceeding 2,000 is Taxable)
  • Voluntary Contribution Received by way of electoral bond, in excess of 20,000 Without maintaining a record of such contribution and the name and address of the person who has made such contribution than it is Taxable

Political Party is required to furnishes Return of Income (ROI) for the previous year u/s 139(4B) on or before the due date under that section.

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