Indian income-tax law | Updated October 2026
Section 13A of the Income-tax Act, 1961: Political Party Income Exemption
Section 13A provided a conditional exclusion from taxable income for certain income received by registered political parties. From 1 April 2026, the corresponding framework is section 12 and Schedule VIII of the Income-tax Act, 2025. Earlier tax years must be examined under the law applicable to those years.
What did section 13A exempt?
For a political party registered under section 29A of the Representation of the People Act, 1951, section 13A of the 1961 Act covered qualifying income under the heads Income from house property, Income from other sources and Capital gains, as well as voluntary contributions. The exemption was conditional; it was not a blanket exemption for every type of receipt or business profit.
Political party: an association or body registered with the Election Commission of India under section 29A. Voluntary contribution: a donation made to the party without a corresponding commercial payment obligation. Capital gains: gains arising from transfer of capital assets, subject to the applicable tax provisions.
Key conditions under section 13A
| Provision | Requirement |
|---|---|
| Proviso (a) | Maintain books of account and supporting documents sufficient for the Assessing Officer to determine income. |
| Proviso (b) | Maintain donor name, address and contribution records for each voluntary contribution exceeding Rs. 20,000; the electoral-bond disclosure exception inserted in 2017 was struck down by the Supreme Court. |
| Proviso (c) | Have accounts audited by a qualified accountant as referred to in section 288. |
| Proviso (d) | For donations exceeding Rs. 2,000, observe the permitted banking/electronic-payment requirements; historic references to electoral bonds must be read subject to the 2024 judgment. |
| Section 29C, Representation of the People Act | Submit the required contribution report; failure to submit the statutory report can defeat exemption for that financial year. |
| Section 139(4B) | File the party's income-tax return by the applicable statutory due date to claim the exemption. |
Threshold distinction: Rs. 20,000 relates to donor-identification records, while Rs. 2,000 concerns permitted payment methods for donations above that amount. These are different obligations; a donation is not automatically tax-exempt merely because it is below either amount.
Supreme Court decision on electoral bonds
On 15 February 2024, the Supreme Court in Association for Democratic Reforms v. Union of India (2024 INSC 113) held the Electoral Bond Scheme, 2018 unconstitutional and struck down the relevant amendment to section 13A(b), among other provisions. The Court found that the donor non-disclosure framework infringed the voters' right to information under Article 19(1)(a). The judgment also addressed amendments permitting unlimited corporate political funding.
Consequently, any reproduced pre-judgment statutory wording excluding electoral-bond donations from donor records must not be treated as the operative disclosure rule. See the Supreme Court judgment (official PDF).
Current law from 1 April 2026: section 12 and Schedule VIII
The Income-tax Act, 2025 took effect from 1 April 2026. Its section 12 deals with income excluded from the total income of political parties and electoral trusts, subject to the specific conditions in Schedule VIII. Section 12(2) provides for taxation where applicable conditions are not met. The tax year and governing legislation must be identified before applying any threshold or filing requirement.
Consult the official Income-tax Act, 2025 (PDF), particularly section 12 and Schedule VIII. For earlier years, consult the official section 13A text along with the Supreme Court's 2024 ruling.
Practical compliance checklist
- Verify the political party's registration under section 29A of the Representation of the People Act.
- Maintain a traceable ledger of all receipts and relevant supporting vouchers.
- Record donor identity and address wherever required by the applicable law and judgment.
- Apply the statutory banking and electronic payment conditions to contributions.
- Obtain the required audit report and retain audit working papers.
- Submit the contribution report under section 29C within the applicable requirements.
- File the relevant income-tax return by the due date and complete applicable schedules.
- Check the correct statute for the tax year: the 1961 Act for earlier years and the 2025 Act for tax years beginning on or after 1 April 2026.
Frequently asked questions
Is every political party donation exempt from tax?
No. The exclusion depends on the qualifying income category and compliance with statutory conditions, including accounts, audit, reporting and return filing.
Are electoral bonds a valid current donation channel?
No. The Supreme Court declared the Electoral Bond Scheme unconstitutional in February 2024.
Which provision governs political-party exemptions in 2026?
For tax years under the Income-tax Act, 2025, refer to section 12 and Schedule VIII. Section 13A remains relevant when examining earlier periods governed by the 1961 Act.
Section 13A: original webpage text and legislative notes
Expand the original statutory extract (historical reference)
This is the original site's historic extract and amendment notes, preserved for reference. It is not a consolidated statement of the law following the 2024 Supreme Court judgment or the 2025 Act.
13A Income Tax Act - Special provision relating to incomes of political parties
Section 13A of Income Tax Act 1961 - Special provision relating to incomes of political parties
1Any income of a political party which is chargeable under the head 2 *** "Income from house property" or "Income from other sources" or 3 Capital gains or any income by way of voluntary contributions received by a political party from any person shall not be included in the total income of the previous year of such political party:
Provided that-
(a) such political party keeps and maintains such books of account and other documents as would enable the 4 Assessing Officer to properly deduce its income therefrom;
(b) in respect of each such voluntary contribution 5 other than contribution by way of electoral bond in excess of 6 twenty thousand rupees, such political party keeps and maintains a record of such contribution and the name and address of the person who has made such contribution; 7 ***
(c) the accounts of such political party are audited by an accountant as defined in the Explanation below sub-section (2) of section 288 5 ; and
5 (d) no donation exceeding two thousand rupees is received by such political party otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account or through electoral bond.
Explanation.- For the purposes of this proviso, "electoral bond" means a bond referred to in the Explanation to sub-section (3) of section 31 of the Reserve Bank of India Act, 1934 (2 of 1934):
8 Provided further that if the treasurer of such political party or any other person authorised by that political party in this behalf fails to submit a report under sub-section (3) of section 29C of the Representation of the People Act, 1951 (43 of 1951) for a financial year, no exemption under this section shall be available for that political party for such financial year:
5 Provided also that such political party furnishes a return of income for the previous year in accordance with the provisions of sub-section (4B) of section 139 on or before the due date under that section.
9 Explanation.- For the purposes of this section, "political party" means a
political party registered under section 29A of the Representation of the People
Act, 1951 (43 of 1951).
----------------------
1. Ins. by Act 29 of 1978, s. 2 (w.e.f. 1-4-1979).
2. The words "Interest on securities" omitted by Act 26 of 1988, s. 7 (w.e.f. 1-4-1989).
3. Ins. by Act 32 of 2003, s. 12 (w.e.f. 1-4-1979).
4. Subs. by Act 4 of 1988, s. 2, for "Income-tax Officer" (w.e.f. 1-4-1988).
5. Ins. by Act 7 of 2017, s. 11 (w.e.f. 1-4-2018).
6. Subs. by Act 46 of 2003, s. 8, for "ten thousand rupees" (w.e.f. 11-9-2003).
7. The word "and" omitted by Act 7 of 2017, s. 11 (w.e.f. 1-4-2018).
8. Ins. by Act 46 of 2003, s. 8 (w.e.f. 11-9-2003).
9. Subs. by
s. 8, ibid., for the Explanation (w.e.f . 11-9-2003).
Official legal references
- Income Tax Department: Section 13A (1961 Act)
- Income Tax Department: Income-tax Act, 2025, section 12 and Schedule VIII
- Supreme Court: Electoral Bonds judgment, 15 February 2024
- Income Tax Department: ITR-7 FAQ and political party reporting
- Election Commission of India
This article is for general legal information. Apply the law and official instructions relevant to the particular tax year and facts.