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

Under the Income-tax Act, 2025, an electoral trust will have its voluntary contributions left out of total income only if, among other conditions, it distributes to registered political parties during the tax year at least what share of the aggregate donations received, together with any brought-forward surplus?

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 function as per the Central Government rules, otherwise its voluntary contributions become taxable.

  1. A75%
  2. B90%
  3. C95%Correct
  4. D100%

Explanation

Schedule VIII (item 2) excludes voluntary contributions received by an electoral trust provided it distributes 95% of the aggregate donations received in the tax year along with any surplus brought forward from an earlier tax year to registered political parties, and functions as per Central Government rules. The other percentages do not appear in the Schedule.

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