Section 12 — Incomes not included in total income of political parties and electoral trusts. Successor to s.13A, s.13B of the 1961 Act.
Section 12 is in Chapter III — Incomes Which Do Not Form Part of Total Income, which runs from section 11 to section 12.
Sub-section (1) keeps out of the total income of a political party or an electoral trust, for a tax year, any income enumerated in Schedule VIII — but only "subject to fulfilment of conditions specified therein". The section itself lists no income and no condition; both sit in Schedule VIII.
Sub-section (2) is the reverse switch: where the Schedule VIII conditions are not satisfied in any tax year in respect of any income enumerated in the Schedule, that income is charged to tax for that tax year. Sub-section (3) empowers the Central Government to make rules or issue notifications for the purposes of the section, as specified in Schedule VIII.
Political parties and electoral trusts hold money that is not commercial income, and the Act exempts it rather than taxing contributions as receipts. The exemption is made conditional so the benefit is tied to the conditions the Schedule imposes; sub-section (2) supplies the sanction, which is loss of exemption for that year's income rather than a penalty.
Nothing here can be applied without Schedule VIII open beside it: the Schedule carries the categories of income and every condition on which the exclusion depends. Failure is not fatal to the entity — sub-section (2) charges only the income in respect of which the conditions were not satisfied, and only for the year in which they were not satisfied, so a lapse in one year does not by itself taint earlier or later years. Because the test is applied per item of income, a party can hold some income outside total income and be charged on the rest in the same year.
An electoral trust receives contributions in a tax year and cannot show that one of the Schedule VIII conditions attaching to that category of receipt was met. Sub-section (1) then does not exclude that income and sub-section (2) charges it for that tax year, while other income of the same year for which the conditions were satisfied stays outside total income.
A political party or electoral trust meets it when filing its return and claiming that Schedule VIII income is not included in total income, and again if an Assessing Officer proposes to charge that income because a Schedule VIII condition was not fulfilled. An ordinary taxpayer never applies this section to their own income.
any income enumerated in Schedule VIII shall not be included, subject to fulfilment of conditions specified therein
Wherever the conditions referred to in Schedule VIII are not satisfied in any tax year in respect of any income enumerated in the said Schedule, such income shall be charged to tax under this Act for that tax year.
See the full 1961 to 2025 concordance.
See the circulars index.
See the notifications index.