INCOME TAX INSTRUCTION NOnbsp19882000 nbspDated October 19 2000 Subject nbspClarification regarding applicability of Chapter IVD in the case of political parties The Board have received representation regarding the applicability of sections 44AB and 271B of the Income tax Act in the case of political parties 2 The Board consulted the Ministry of Law and Justice and have been advised that i the idea of profession arises from a profit motive In a political party as in any a charitable institution there is no private profit motive nor a possibility of distribution of income among the members ii Having kept such income of political parties out of the total income under section 13A of the Act the same income cannot be brought to tax or penalty under some different provisions nor a political party can be put to restrictions other than those mentioned in the exemption clause ie section 13A of the Act 3 3 Thus the Board are of the view that the income of the political parties are governed by the special provisions ie section 13A of the Income tax Act 1961 and accordingly the provisions of Chapter IVD which are applicable for profits and gains of business or profession cannot be applied in the cases of political parties Income of political parties from voluntary contributions cannot be said to be income from profession so as to attract sections 44AB or 270B of the Income tax Act 4 However the political parties will have to fulfil the requirement of maintaining the accounts and getting them audited by an accountant as provided in section 13A of the Act to claim the benefit of exemption 5 This may kindly be brought to the knowledge of all officers under your region FNo 22512899ITAII Pt Kamlesh C Varshney Under Secretary to the Govt of India nbsp