Swadeshi Electoral trust is an Electoral Trust incorporated on 1st May 2026* and approved by CBDT in accordance with the scheme made by Central…
CA Final · Direct Tax Laws and International Taxation · PYQS · May 2026
Swadeshi Electoral trust is an Electoral Trust incorporated on 1st May 2026* and approved by CBDT in accordance with the scheme made by Central Government. It received voluntary contributions amounting to 1.20 crores during the FY 25-26. It invested a part of the contribution in 6 months bank fixed deposit and received an interest of 1 lakh. Being in the first year of incorporation, what is the obligation on the Swadeshi Electoral trust regarding the distribution of these contributions to be eligible for exemption. Explain with the relevant provision and rule. * to be read as '2025'
Suggested Answer and Working Notes:
As per section 13B, the voluntary contribution of 1.20 crores received by Swadeshi Electoral trust would be exempt during the previous year 2025-26, if it distributes to a registered political party during the said previous year 1.14 crores, being 95% of the total contributions received by it during the financial year along with the surplus, if any, brought forward from earlier previous year and functions in accordance with the rules (Rule 17CA) made by the Central Government. The exemption under section 13B will be available only in respect of voluntary contribution received by Swadeshi Electoral trust. The exemption cannot be claimed in respect of interest of 1lakh received on bank fixed deposits.
Topics: Assessment of Trusts and Institutions, Political Parties and Other Special Entities
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