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CA Final · Direct Tax Laws & International Taxation · Assessment of Trusts and Institutions, Political Parties and Other Special Entities

Bharat Jan Morcha, a political party registered under section 29A of the Representation of the People Act, 1951, earned rent of ₹6,00,000 from a building and interest of ₹2,00,000 from bank deposits in the tax year. It received voluntary contributions of ₹15,00,000. It satisfied every condition in Schedule VIII (books, records, audit, mode of receipt, treasurer's report and return filing). What is the amount of these incomes included in its total income?

The amount included is nil. A registered political party that fulfils all Schedule VIII conditions does not include house property income, other-sources income, capital gains or voluntary contributions in total income, so the rent, interest and contributions are all excluded.

  1. A₹23,00,000
  2. B₹8,00,000
  3. C₹15,00,000
  4. DNilCorrect

Explanation

Schedule VIII excludes income from house property, income from other sources, capital gains and voluntary contributions of a registered political party when all the conditions are met. Rent (house property) of ₹6,00,000, interest (other sources) of ₹2,00,000 and contributions of ₹15,00,000 are all covered. Therefore nothing is included. Including only rent and interest (₹8,00,000) wrongly treats these as taxable despite compliance.

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