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

Jan Kalyan Party, registered under section 29A of the Representation of the People Act, 1951, earned interest of ₹6,00,000 from bank deposits (Income from other sources) and received voluntary contributions of ₹40,00,000 in the tax year. It maintained books of account, kept records of contributions above ₹20,000, got accounts audited, received no donation above ₹2,000 except by account payee cheque or electronic mode, its treasurer submitted the report under section 29C(3), and it filed its return by the due date. What amount is includible in its total income under Schedule VIII read with section 12 of the Income-tax Act, 2025?

The amount includible is nil. Because the political party meets every condition of Schedule VIII, namely books, records, audit, mode of donations, treasurer report and timely return, both its other-sources income and voluntary contributions are excluded from total income under section 12.

  1. ANilCorrect
  2. B₹6,00,000
  3. C₹40,00,000
  4. D₹46,00,000

Explanation

All conditions in column D of item 1 of Schedule VIII are satisfied, so income from other sources and voluntary contributions are not included in total income. The option of ₹6,00,000 wrongly taxes interest, while ₹40,00,000 wrongly taxes contributions. ₹46,00,000 ignores the exemption completely.

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