Section 13A of the Income Tax Act 1961
Topic: Electoral Reforms: Money, Criminalisation and Simultaneous Elections · NCERT: Beyond NCERT
Meaning
Section 13A of the Income-tax Act 1961 makes a political party's income tax-free, but only if the party follows certain rules. It must:
- keep proper, audited accounts;
- file its income-tax returns;
- report donations above ₹20,000 to the ECI under Section 29C of the RPA 1951.
The exemption is one way the state already funds parties indirectly. The provision was carried into the new Income-tax Act of 2025.
Example
A recognised party that files audited accounts and its yearly donation report pays no tax on the contributions it receives. A party that skips the Section 29C report can lose the exemption.
Don't confuse with
- State funding of elections: the state directly paying election costs, in cash or in kind. India has not adopted it. Tax exemption only lets parties keep more of what they raise themselves.
Related concepts
- Money power in elections
- Election expenditure limits
- Star campaigner
- Section 29C of the RPA 1951
- Cash donation limit
- Corporate donations to political parties
- Foreign funding of political parties
- Electoral trusts