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CMA Final · Direct Tax Laws and International Taxation · Assessment of Trusts

Under Schedule VIII to the Income-tax Act, 2025, a registered political party receives a donation. For the exclusion from total income to stay available, which receipt mode is permitted for a donation exceeding ₹2,000?

For a donation above ₹2,000, the party may receive it by account payee cheque, account payee bank draft, electronic clearing through a bank account, another prescribed electronic mode, or an electoral bond. Receipt in cash or by bearer cheque breaches the condition, so the exemption for that income is lost.

  1. ACash, if the donor's name and address are recorded
  2. BAn account payee cheque, an account payee bank draft, electronic clearing through a bank account, other prescribed electronic mode or an electoral bondCorrect
  3. COnly an electoral bond
  4. DA bearer cheque, if the party's treasurer endorses it

Explanation

Condition (d) of item 1 says no donation exceeding ₹2,000 may be received otherwise than by an account payee cheque, an account payee bank draft, electronic clearing through a bank account, another prescribed electronic mode, or an electoral bond. Cash and bearer cheques are not allowed even with records. An electoral bond is not the only permitted mode.

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