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

For a political party to keep income such as capital gains and income from other sources excluded under Schedule VIII of the Income-tax Act, 2025, which of the following is among the conditions?

The party's accounts must be audited by an accountant. This is one of the Schedule VIII conditions, along with maintaining books, recording contributions above ₹20,000, limiting non-banking donations to ₹2,000, filing the treasurer's report and furnishing the return on time. The 95% distribution rule applies only to electoral trusts.

  1. AIts accounts must be audited by an accountantCorrect
  2. BIt must distribute 95% of its income to other parties
  3. CIt must invest all income in government securities
  4. DIt must have been registered for at least ten years

Explanation

Condition (c) requires the accounts of the political party to be audited by an accountant. The 95% distribution condition belongs to electoral trusts, not parties. No investment mode or ten-year registration condition appears in Schedule VIII.

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