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[…] Selection of EC must be Transparent […]

Sudhakar Ram
Sudhakar Ram
8 years ago

“Political parties don’t pay tax on donations under 20,000” Is this statement correct? The correct statement was that political parties didn’t disclose the names of donors below 20,000.
Please check

Amey Khanzode
Amey Khanzode
8 years ago
Reply to  Sudhakar Ram

Please have a look at this article http://www.thehindu.com/news/national/Plea-in-SC-challenges-100-per-cent-income-tax-exemption-to-political-parties/article16912347.ece

It seems political parties have to maintain audited accounts and file ITRs but they are exempted from paying tax according to Section 13 A of the Income Tax Act on the following grounds

Section 13A of the Act provides that the following categories of income derived by a political party are not included in computing its total income:

(a) any income, which is chargeable under the heads “income from house property”, ‘capital gains’ and ‘income from other sources; and

(b) any income by way of voluntary contributions.

refer http://incometaxindia.gov.in/Acts/Income-tax%20Act,%201961/2014/102120000000037124.htm

Earlier the limit for contributions was Rs 20000 which recently was amended by the Finance Act 2017 to be limited to Rs 2000.

The disclosure norms are with respect to the Election Commission. Contributions under Rs 20000 were not mandatory to be disclosed to the EC, which also has been amended to Rs 2000 in the recent Finance Act.

Sudhakar Ram
Sudhakar Ram
8 years ago
Reply to  Amey Khanzode

I got what you wrote, but in the column published by ForumIAS, it says:

“Political parties don’t pay tax on donations under 20,000” This is erroneous because political parties are 100% tax exempt on all the donations not just those below 20,000 as said in the blog.

Sadakchap
8 years ago
Reply to  Sudhakar Ram

Yes. You are correct.
Though they have to file ITR they are exempt from paying taxes as they are not eligible to undertake economic activities.
No economic activity means no obligation to pay taxes.

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