Important Legal and Regulatory Requirements with regard to the contribution to Political Parties for Indians

1. As per Sections 80GGB and 80GGC of the Income-Tax Act,1961 any contribution made by an Indian company or any person, except local authority and every artificial juridical person wholly or partly funded by the Government, to any recognised political party in India is eligible for deduction while computing their total income.

2. As per Section 293A of the Companies Act,1956, a Non-Government Indian company which has been in existence for more than three financial years may contribute to a political party or for political purpose to any person an amount not exceeding 5% of its average net profits determined in accordance with the provisions of sections 349 and 350 during the three immediately preceding finanancial years, subject to complying with the provisions of section 293A of the Companies Act,1956.

3. As per section 29C of The Representation of the People Act,1951, the Political Party shall, in each financial year, prepare and file a report of all its contributions received in excess of Rs. twenty thousand from any person in that financial year to the Election Commission of India and before the respective income tax Authorities.

For full text of the above provisions, Please read the relevant provisions of the respective Acts.