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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. For the tax year it earned rent from house property of ₹4,00,000 and interest of ₹1,50,000, and received voluntary contributions of ₹30,00,000. It maintains books, keeps records of contributions above ₹20,000 with donor names and addresses, gets its accounts audited, files its return on time and its treasurer files the section 29C(3) report. Every donation above ₹2,000 was received by account payee cheque, bank draft, electronic clearing or other prescribed electronic mode. What is its total income as per the Income-tax Act, 2025?

The total income is nil. A registered political party meeting all conditions in Schedule VIII (books, donor records, audit, mode of receipt, treasurer's report and timely return) does not include house property income, other sources income or voluntary contributions, so all the amounts are excluded under section 12.

  1. A₹35,50,000
  2. B₹5,50,000
  3. C₹4,00,000
  4. DNilCorrect

Explanation

Under section 12 read with Schedule VIII, a registered political party does not include income from house property, other sources, capital gains or voluntary contributions if all conditions (a) to (f) are met. All conditions are met here, so rent, interest and contributions are all excluded. Option ₹5,50,000 wrongly taxes the contributions-free income; ₹35,50,000 ignores the exemption altogether.

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