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CMA Final · Direct Tax Laws and International Taxation · Assessment of Trusts

A political party registered under section 29A of the Representation of the People Act, 1951 claims exclusion of its voluntary contributions and other income under Schedule VIII. Which fact would cause the exclusion to fail for that tax year?

Receiving a ₹5,000 cash donation defeats the exclusion. A political party must not receive any donation exceeding ₹2,000 except by account payee cheque or draft, electronic mode, or electoral bond. Breach of this condition makes the income taxable for that tax year.

  1. AIt maintained a record of the name and address of the donor of a ₹25,000 contribution received by cheque
  2. BIt received a donation of ₹5,000 in cashCorrect
  3. CIts accounts were audited by an accountant
  4. DIts return of income was furnished on or before the due date

Explanation

One condition is that no donation exceeding ₹2,000 may be received otherwise than by account payee cheque, account payee bank draft, electronic clearing system or other prescribed electronic mode, or electoral bond. A ₹5,000 cash donation breaches it, so the income is charged to tax. The other facts are compliance with the conditions.

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