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

Hind Textiles Ltd, an Indian company, contributed ₹ 6,00,000 to a registered political party: ₹ 4,50,000 by account payee cheque and ₹ 1,50,000 in cash. Under the Income-tax Act, 2025, what deduction is allowed to the company in respect of these contributions?

The company can claim ₹ 4,50,000. Section 136 permits a deduction only for contributions made other than in cash to a registered political party or electoral trust, so the ₹ 1,50,000 cash portion is disallowed. The party's own exemption does not affect the donor's deduction.

  1. A₹ 6,00,000
  2. B₹ 4,50,000Correct
  3. C₹ 1,50,000
  4. DNil, since the party is exempt

Explanation

Section 136 allows an Indian company a deduction for amounts contributed other than by way of cash to a registered political party or electoral trust. The cheque payment of ₹ 4,50,000 qualifies and the cash ₹ 1,50,000 does not. The party's own exemption is independent of the donor's deduction, so Nil is wrong.

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