Political Party Tax Exemption under Section 13A

Section 13A of the Income-tax Act, 1961 grants a conditional income-tax exemption to a political party registered under Section 29A of the Representation of the People Act, 1951. The benefit applies only to specified categories of income and depends on compliance with accounting, audit, donation, disclosure and return-filing requirements.

Income covered by the exemption

The exemption covers income chargeable under the heads income from house property, capital gains and income from other sources, as well as income received through voluntary contributions. It does not amount to a blanket exemption of every kind of income.

Accounting and donation conditions

• The party must maintain books of account and other documents that enable the Assessing Officer to properly determine its income.
• For every voluntary contribution exceeding Rs 20,000, it must keep a record of the contributor's name and address, subject to the statutory treatment of contributions through electoral bonds.
• Its accounts must be audited by an accountant as defined under the Income-tax Act.
• A donation exceeding Rs 2,000 cannot be received in cash. It must be received through an account-payee cheque, account-payee bank draft, electronic clearing system through a bank account, or another prescribed electronic mode.

Disclosure and return-filing conditions

The party's treasurer or authorised person must submit the contribution report required by Section 29C of the Representation of the People Act, 1951. The party must also furnish its income-tax return under Section 139(4B) by the due date prescribed under Section 139(1); failure to meet these statutory conditions can result in loss of the exemption.