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

Rashtriya Vikas Party is a registered political party. In a tax year it received the following voluntary contributions: ₹30,000 by account payee cheque from Mr. Arora, ₹1,80,000 by electronic clearing system from Ms. Bose, and ₹1,500 in cash from a supporter. It also received capital gains of ₹7 lakh on sale of shares. It maintains books, gets accounts audited, files its return on time and submits the treasurer's report. It keeps a record of the name and address of the donors of ₹30,000 and ₹1,80,000 only. Which statement is correct under Schedule VIII of the Income-tax Act, 2025?

All conditions are satisfied. Records of name and address are needed only for contributions above ₹20,000, and cash is barred only for donations exceeding ₹2,000, so the ₹1,500 cash gift is permitted. Hence contributions and capital gains are not included in total income.

  1. AAll conditions are met, so contributions and capital gains are not included in total incomeCorrect
  2. BConditions are not met because the ₹1,500 cash donation exceeds the permitted limit
  3. CThe record condition applies to every contribution irrespective of amount, so it is breached
  4. DConditions are met only for the capital gains, not for contributions

Explanation

Condition (b) requires records only for contributions exceeding ₹20,000; both ₹30,000 and ₹1,80,000 are recorded. Condition (d) bars only donations exceeding ₹2,000 received otherwise than by prescribed modes; ₹1,500 cash is within the limit. So all conditions hold and the contributions and capital gains are excluded.

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