As per Indian Income Tax Act, the following points must be kept in mind while in respect of donations paid to political parties:-
- Any Indian company is allowed to pay the donation to any political party or parties.
- Any person except local authority and an artificial juridical person who is funded by government, wholly or partly.
- No payment must be made in cash. The payment can be made by cheque/draft/pay order/direct transfer in account of political parties.
- The political party must be registered under section 29A of Representation of the People Act, 1951 or an electoral trust.
- There is no limit of payment, made to political parties.
- 100% deduction is allowed from the income of the assessee in respect of the donation made to political parties.
- up to financial year 2016-17, the political parties were accepting donation up to Rs.20000/= in cash but with effect from 01.04.17 no political party will accept cash donation more than Rs.2000/=. Moreover, the political parties have to disclose the identity of donors in respect of donations more than Rs.2000/=.
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