CMA Final · Direct Tax Laws and International Taxation · Assessment of Trusts
Under Schedule VIII read with section 12 of the Income-tax Act, 2025, an electoral trust keeps its voluntary contributions out of total income only if it distributes to registered political parties during the tax year at least what share of the aggregate donations received, along with any surplus brought forward?
The required share is 95%. An electoral trust must distribute 95% of the aggregate donations received in the tax year, plus any surplus brought forward, to registered political parties, and must function under the Central Government's rules, for its voluntary contributions to stay out of total income.
- A85%
- B90%
- C95%Correct
- D100%
Explanation
Condition (a) for an electoral trust in Schedule VIII requires distribution of 95% of the aggregate donations received during the tax year along with the surplus, if any, brought forward from earlier years. The other figures are not the prescribed percentage. The trust must also function as per rules made by the Central Government.
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