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

Under the Income-tax Act, 2025, an Indian company contributes to a political party registered under section 29A of the Representation of the People Act, 1951. Which contribution qualifies for deduction under section 136?

A contribution by an Indian company to a registered political party by account payee cheque qualifies for deduction under section 136, because the deduction is available only for amounts contributed other than in cash. Cash contributions are not deductible, and the provision applies only to Indian companies.

  1. ARs 5,00,000 paid in cash to the registered political party
  2. BRs 5,00,000 paid by account payee cheque to the registered political partyCorrect
  3. CRs 5,00,000 paid by a foreign company to the registered political party
  4. DRs 5,00,000 paid in cash to an electoral trust

Explanation

Section 136 allows an Indian company a deduction for a contribution made other than by way of cash to a registered political party or an electoral trust. A cheque payment satisfies this. Cash payments, whether to the party or to an electoral trust, are excluded, and a foreign company is not an Indian company.

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