CMA Final · Direct Tax Laws and International Taxation · Assessment of Companies
Kaveri Ltd, an Indian company, contributed Rs 4,00,000 to an electoral trust in the tax year 2026-27 by bank transfer and Rs 1,00,000 in cash to a registered political party. Under section 136 of the Income-tax Act, 2025, what is the deduction available for contributions?
The deduction is Rs 4,00,000. Section 136 permits an Indian company to deduct contributions to an electoral trust or a registered political party only if they are not made in cash, so the Rs 1,00,000 cash contribution is disallowed.
- ARs 5,00,000
- BRs 1,00,000
- CRs 4,00,000Correct
- DNil
Explanation
Section 136 allows an Indian company a deduction for contributions made other than by way of cash to a registered political party or an electoral trust. The Rs 4,00,000 bank transfer qualifies; the Rs 1,00,000 cash payment does not. Total Rs 5,00,000 is wrong because it ignores the cash exclusion.
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