Taxation of Electoral Trust - Section 13B - Income Tax - Ready Reckoner - Income Tax

Taxation of Electoral Trust - Section 13B Voluntary contribution treated as income Any voluntary contribution received by an electoral (as may be approved by the CBDT in accordance with the scheme to be made by the central government ) shall be treated as its income under section 2(24). Contribution for availing exemption under section 13B Any voluntary contributions received by an electoral trust shall not be included in the total income of the previous year of such electoral trust, if:- Such electoral trust distributes to any political party registered under section 29A of the Representation of the people Act, 1951 during the said previous year, 95% of the aggregate donations received by it during the previous year along with the surplus, if any, brought forward from any earlier previous year; and Such electoral trust must functions in accordance with the rules made by the Central Government. Notes:- If Electoral Trust invests the donations received by it in say Bank FDR, then the interest from such investment is not exempt under Section 13B and shall be taxable. Section 80GGB and 80GGC have been amended to provide that if any person makes a donation to an Electoral Trust, then such donations shall be allowed as deduction from the gross total income of such person. However, no deduction shall be allowed under Section 80GGB / 80GGC in respect of donations made in cash. Exemption u/s 13B shall be available to Electoral Trust only when it distributes 95% of the aggregate donation received by it during previous year along with surplus brought forward from earlier years. Exemption u/s 13B is available with respect to voluntary contribution. It is not available with respect to any other income. Thus, any other income of Electoral Trust shall be chargeable to Tax.