Sec182 of companies act 2013

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shubh (Querist)
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18 July 2014 Under the Companies Act 2013 contribution to any person for political purpose is not allowed. Can anyone put some more clarification on this point?

Ankur Garg

Ankur Garg (Expert)
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19 July 2014 Political contribution to any political party is allowed subject to the limit of 7.5% of net profit as prescribed in section 182(1). This contribution is also allowed by passing board resolution and needs to be disclosed in profit and loss account. This means law wants to protect the funds of the company from being misused.

Payment to a person is prohibited to avoid syphoning of funds of the company. It was noticed in past that some company paying company funds to its director indirectly as political contribution. So that may the reason.