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

Bharat Jan Vikas Party is a political party registered under section 29A of the Representation of the People Act, 1951. In the tax year it earned Rs 6,00,000 as interest on fixed deposits (income from other sources) and Rs 4,00,000 as rent from a party-owned building (house property income). It also received voluntary contributions of Rs 50,00,000. It satisfied every condition in Schedule VIII (books, records, audit, mode of receipt, section 29C(3) report, and return filed on time). What is the amount includible in its total income?

The includible amount is nil. A registered political party that fulfils all Schedule VIII conditions does not include income from house property, other sources, capital gains or voluntary contributions in its total income. Since every condition is satisfied, the interest, rent and contributions are all excluded.

  1. ANilCorrect
  2. BRs 4,00,000
  3. CRs 10,00,000
  4. DRs 60,00,000

Explanation

Under Schedule VIII (read with section 12), a registered political party's income from house property, other sources, capital gains and voluntary contributions is not included in total income if the conditions are met. All conditions are met here, so interest, rent and contributions are all excluded. Rs 10,00,000 would be right only if the party's property and interest income were taxed, which happens only on non-compliance.

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