Contents
- What is the term “Political Party?”
- What is Section 13A of the Income Tax Act?
- Which are the exemptions available for the political party?
- What are the conditions to avail of exemptions U/S 13A?
- How does a Political party furnish their return of income?
What is the term “Political Party?”
income of political parties A political party registered under Section 29A of the Representation of the People Act, 1951, is commonly known as a “political party.”
What is Section 13A of the Income Tax Act?
Section 13A of the Income Tax Act offers a specific provision for political parties, enabling them to receive tax exemption in certain situations. Under this section, any income acquired by a political party through voluntary contributions or any interest, dividend, or rent from its assets is exempted from inclusion in the party’s total income for taxation purposes.
Which are the exemptions available for the political party?
According to Section 13A, any income of a political party from the following sources is exempt from tax:
Income from house property;
Income from other sources;
Capital gains; and
Income by way of voluntary contributions received by the political party from any individual.
Special provision relating: income of political parties
What are the conditions to avail of exemptions U/S 13A?
A political party seeking tax exemption under Section 13A must fulfil the following requirements:
- It must be registered under Section 29A of the Representation of the People Act (RPA).
- It must maintain books of account and other documents allowing the Assessing Officer to income of political parties compute its income. Note that it is not necessary for a political party to maintain all the books of account specified under Section 44AA; it is sufficient to keep only those books aiding the AO in determining its income.
- income of political parties It must record every contribution exceeding Rs 20,000 along with the name and address of the contributor, unless the contribution is made through an electoral bond.
- The political party must undergo an audit of its financial records conducted by a chartered accountant.
- income of political parties It must not have received any donation exceeding Rs 2,000 except by way of account payee cheque/demand draft or ECS or through a bank account or electoral bond.
- income of political parties The treasurer of the political party or any individual authorized by the party must present a report detailing donations exceeding Rs 20,000 to the Election Commission of India for the respective financial year. income of political parties This submission should occur on or before the deadline for filing the income tax return for that financial year, as specified in Section 29C of the Representation of the People Act.
income of political parties While Section 13A stipulates that no tax relief will be granted for failure to submit such a report, it should be noted that Section 29C of the RPA itself denies tax relief to a political party if it fails to submit such a report.
How does a Political party furnish their return of income?
income of political parties As per Section 139(4B) of the Income Tax Act, a political party must submit an income tax return if its income (prior to claiming exemption) under Section 13A surpasses the basic exemption threshold (excluding the exemption granted under Section 13A). The tax rate applicable to political parties is identical to that for ordinary resident individuals. income of political parties The income tax return must be filed and endorsed by the Chief Executive Officer of the political party for the corresponding financial year.
Conclusion
In conclusion, the regulations outlined in the Indian Income Tax Act, particularly Section 13A, provide specific provisions for political parties regarding tax exemption. To qualify for exemption, a income of political parties political party must fulfill certain requirements, including registration under Section 29A of the Representation of the People Act, maintenance of proper books of account, and adherence to donation reporting guidelines.
Additionally, if a political party’s income exceeds the basic exemption limit before claiming income of political parties exemption under Section 13A, it is obligated to file a return of income. These regulations ensure transparency and accountability in the financial operations of political parties.
SOURCES: https://tax2win.in/guide/section-13a-of-income-tax-act
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