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

Janata Vikas Dal, a political party registered under section 29A of the Representation of the People Act, 1951, earned Rs 6,00,000 as interest (taxable as Income from other sources) and received Rs 14,00,000 as voluntary contributions during the tax year. It satisfied all conditions in Schedule VIII, including audit, record-keeping, a report by its treasurer and filing the return on time. What is the amount includible in its total income from these two items?

The includible amount is nil. A registered political party that fulfils all the Schedule VIII conditions does not include income from other sources or voluntary contributions in its total income, so both the interest and the contributions are excluded.

  1. ARs 20,00,000
  2. BRs 14,00,000
  3. CRs 6,00,000
  4. DNilCorrect

Explanation

Under Schedule VIII read with section 12, a registered political party does not include income from house property, other sources, capital gains or voluntary contributions, provided the conditions are met. All conditions are met here, so both the interest of Rs 6,00,000 and the contributions of Rs 14,00,000 are excluded. Including the interest alone would ignore that other-sources income is covered by the exclusion.

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