Political parties exempted from tax on deposits of Rs 500, Rs 1,000
The exemption is applicable if the party keeps books and other documents and are audited by a Chartered Accountant
The income could be from house property, other sources, capital gains and voluntary contributions
New Delhi: As it levies stiff penalties on unaccounted cash in banks, the government yesterday said political parties depositing old Rs 500 and Rs 1000 notes in their accounts will be exempt from income tax.
"If it is a deposit in the account of a political party, they are exempt. But if it is deposited in individual's account then that information will come into our radar. If the individual is putting money in his own account, then we will get information," Revenue Secretary Hasmukh Adhia said.
Section 13A of the Income Tax Act, 1961 grants exemption from tax to political parties in respect of their income. This income could be from house property, other sources, capital gains and income by way of voluntary contributions received from any person.
These categories of income qualify for exemption without any monetary or other limit and the income so exempted would not even be included in the total income of the political party for the purpose of assessment. However, the tax exemption is applicable only if the political party keeps and maintains books and other documents of the income and the accounts are audited by a chartered accountant.
Besides, farmers exempted from paying tax on agriculture income will need to furnish a self-declaration that their earnings are less than R2.5 lakh a year to make bank deposits without PAN. For those unable to do that, furnishing PAN will be required.
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