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CS Executive · Tax Laws and Practice · Incomes which do not form part of Total Income

An electoral trust received voluntary contributions of ₹ 80,00,000 in a tax year and had no surplus brought forward. For the voluntary contributions to be excluded from its total income under Schedule VIII, what minimum amount must it distribute to registered political parties during that tax year (the other condition being satisfied)?

The trust must distribute ₹ 76,00,000. Schedule VIII requires an electoral trust to pass on 95% of the aggregate donations received in the year, along with any earlier surplus brought forward, to registered political parties. Here 95% of ₹ 80,00,000 is ₹ 76,00,000.

  1. A₹ 60,80,000
  2. B₹ 72,00,000
  3. C₹ 76,00,000Correct
  4. D₹ 80,00,000

Explanation

The condition requires distribution of 95% of aggregate donations received in the year plus any brought-forward surplus. With no surplus, 95% of ₹ 80,00,000 = ₹ 76,00,000. ₹ 72,00,000 uses 90%, a wrong rate; ₹ 60,80,000 uses 76%.

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