801. Filing of returns by political parties/its units at State or district level in terms of sub-section (4B) – Obligation therefor
1. Section 13A has been inserted by the Taxation Laws (Amendment) Act, 1978 and has come into effect from 1-4-1979. Under section 13A, any income of a political party chargeable under the heads “Interest on securities”, “Income from house property”, “Income from other sources” or any income by way of voluntary contributions is exempt from income-tax.
2. Under Explanation to section 13A, political party means an association or body of individual citizens of India registered with the Election Commission of India as a political party under paragraph 3 of the Election Symbols (Reservation and Allotment) Order, 1968, and includes a political party deemed to be registered with that Commission under the proviso to sub-paragraph (2) of that paragraph.
3. The exemption under section 13A is subject to the fulfillment of three conditions specified in the proviso to section 13A. These conditions are :
(1) The political party keeps and maintains such books of account and other documents as would enable the Income-tax Officer to properly deduce its income therefrom.
(2) In respect of each voluntary contribution in excess of ten thousand rupees, such political party keeps and maintains a record of such contributions and the name and address of the person who has made such contributions.
(3) The accounts of such political party are audited by an accountant as defined in the Explanation below to sub-section (2) of section 288.
4. Sub-section (4B) has been inserted in section 139 by the Taxation Laws (Amendment) Act, 1978 under which every political party is obliged to file every year a return of total income voluntarily. The total income for this purpose is to be computed without giving effect to the provisions of section 13A. If such total income exceeds the maximum amount which is not chargeable to tax, the liability of the political party to file the return of income voluntarily arises. As regards filing of returns by the units of a political party at State or District levels is concerned, it will depend upon whether these units are only branches of the national party and their receipts and expenditure form part of the account of the national party. If so, the units need not file separate returns of income. In the case where units are separately registered as political parties with the Election Commission of India in terms of para 2 above, the requirement of filing of returns by these units will apply as in the case of parent unit.
Circular : No. 412 [F. No. 200/84/79-IT(A-I)], dated 2-3-1985.