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

Janhit Party, a registered political party, received a voluntary contribution of ₹35,000 from Mr. Sethi through an account payee cheque in the tax year. Which action is required under Schedule VIII for this contribution, assuming it was not an electoral bond?

The party must keep a record of the contribution along with the contributor's name and address. Schedule VIII requires this for every voluntary contribution above ₹20,000 other than by electoral bond, and the cheque mode of payment does not remove the requirement.

  1. ANo record is needed because it was received by cheque
  2. BThe party must keep a record of the contribution and the name and address of the contributor, as it exceeds ₹20,000Correct
  3. CA record is needed only if the amount exceeds ₹2,00,000
  4. DThe party must distribute 95% of it to other parties

Explanation

Schedule VIII requires a record of each voluntary contribution, other than by electoral bond, in excess of ₹20,000, along with the name and address of the contributor. ₹35,000 exceeds ₹20,000, so the record is required even though payment was by cheque. The 95% distribution rule applies to electoral trusts, not political parties.

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