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Taxation of Political Parties - Section 13A - Income Tax - Ready Reckoner - Income TaxExtract Taxation of Political Parties - Section 13A Special provision relating to incomes of political parties Section 13A Following incomes derived by political party are not to include in computing its Total Income: Income which is chargeable under the head 'income from house property' Income chargeable under the head 'income from other sources' Any income by way of voluntary contribution from any person Any income from capital gain Requisite Condition [First Proviso to Section 13A] Such political party keeps and maintains such books of account and other documents as would enable the Assessing Officer to properly deduce its income therefrom; In respect of each such 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, The accounts of such political party are audited by a Chartered Accountant. No donation exceeding ₹2,000 is received by such 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. Explanation. For the purposes of this proviso, electoral bond means a bond referred to in the Explanation to sub-section (3) of. section 31 of the Reserve Bank of India Act, 1934. Note: No exemption shall be available for a financial year, if political party failed to submit a report under section 29C(3) of the Representation of the People Act, 1951 for a financial year. Return of Income of Political Party Political Party required to furnish a return of income for the previous year in accordance with the provisions of Section 139(4B) on or before the due date under that section . Note:- If any profit is earned by a political party from running a canteen, it is not exempt as it is from commercial activity. Note:- Where a political party is unable to maintain its account for a reason whatsoever, or satisfy pre-conditions set out in proviso to section 13A, exemption cannot be granted to it from payment of tax. [ Commissioner of Income Tax, Delhi-XI Versus Janata Party - 2016 (3) TMI 878 - Delhi High Court ] Some Important Notes:- Contribution exceeding ₹ 20,000 should be by crossed cheque or draft If a person makes a donation to political party, then he shall get deduction under Section 80GGB / 80GGC from his total income of the donation so made. However, no deduction shall be disallowed under Section 80GGB / 80GGC in respect of donations made in cash.
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