Amendment in Companies Act and Income Tax Act regarding donations to political
Election and Other Related Laws (Amendment) Act, 2003 - Act No. 46 of 2003, effective from 11-9-2003
The following Act of Parliament received the assent of the President on the 11th September, 2003 :
The Election and Other Related Laws (Amendment) Act, 2003
No. 46 of 2003
An act further to amend the Representation of the People Act, 1951, the Companies Act, 1956 and the Income-tax Act, 2003
Be it enacted by Parliament in the Fifty-fourth Year of the Republic of India as follows :
Chapter I - Preliminary
1. This Act may be called the Election and Other Related Laws (Amendment) Act, 2003.
Chapter II - Amendments of the Representation of the People Act, 1951
2. Insertion of new sections 29B and 29C.- After section 29A of the Representation of the People Act, 1951 (43 of 1951) (hereafter in this Chapter referred to as the principal Act), the following sections shall be inserted, namely:
`29B. Political parties entitled to accept contribution.- Subject to the provisions of the Companies Act, 1956 (1 of 1956), every political party may accept any amount of contri-bution voluntarily offered to it by any person or company other than a Government company:
Provided that no political party shall be eligible to accept any contribution from any foreign source defined under clause (e) of section 2 of the Foreign Contribution (Regulation) Act, 1976 (49 of1976).
Explanation. - For the purposes of this section and section 29C,-
(a) "company" means a company as defined in section 3;
(b) "Government company" means a company within the meaning of section 617; and
(c) "contribution" has the meaning assigned to it under section 293A of the Companies Act, 1956 (1 of 1956) and includes any donation or subscripttion offered by any person to a political party; and
(d) "person" has the meaning assigned to it under clause (31) of section 2 of the Income-tax Act, 1961 (43 of 1961), but does not include Government company, local authority and every artificial juridical person wholly or partially funded by the Government.
29C. Declaration of donation received by the political parties.- (1) The treasurer of a political party or any other person authorised by the political party in this behalf shall, in each financial year, prepare a report in respect of the following, namely:
(a) the contribution in excess of twenty thousand rupees received by such political party from any person in that financial year;
(b) the contribution in excess of twenty thousand rupees received by such political party from companies other than Government companies in that financial year.
(2) The report under sub-section (1) shall be in such form as may be prescribed.
(3) The report for a financial year under sub-section (1) shall be submitted by the treasurer of a political party or any other person authorised by the political party in this behalf before the due date for furnishing a return of its income of that financial year under section 139 of the Income-tax Act, 1961 (43 of 1961) to the Election Commission.
(4) Where the treasurer of any political party or any other person authorised by the political party in this behalf fails to submit a report under sub-section (3), then, notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961), such political party shall not be entitled to any tax relief under that Act.`
3. Insertion of new section 39A. - After section 39 of the Principal Act, the following section shall be inserted, namely :
"39A. Application of equitable sharing of time. -" (not reproduced here, as not relevant)
4. Amendment of section 77. - In section 77 of the Principal Act, in sub-section (1), for Explanations 1 and 3, the following Explanations shall be substituted, namely:
"Explanations 1 and 3. -" (not reproduced here, as not relevant).
5. After Part V of the Principal Act, the following Part shall be inserted, namely :
"Part VA
Free supply of certain material to candidates of recognised political parties"
(not reproduced here, as not relevant).
Chapter III - Amendment of the Companies Act, 1956
7. Amendment of section 293A - In section 293A of the Companies Act, 1956, after sub-section (5), the following Explanation shall be inserted, namely:
`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).`
Note : Section 293A dealing with prohibitions and restrictions regarding political contributions, has been amended as above.
Chapter III - Amendments of the Income-Tax Act, 1961
8. Amendment of section 13A.- In section 13A of the Income-tax Act, 1961 (43 of 1961) (hereafter in this Chapter referred to as the Income-tax Act),-
(i) in the proviso, in clause (b), for the words "ten thousand rupees", the words "twenty thousand rupees" shall be substituted;
Note : The condition of keeping and maintaining a record of each contribution in excess of Rs.10,000 has been amended so as to increase this limit to Rs.20,000.
(ii) after the proviso and before the Explanation, the following proviso shall be inserted, namely:
"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 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.";
Note : A further condition has been imposed as above for exemption to income of political parties.
(iii) for the Explanation, the following Explanation shall be substituted, namely:
`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).`
Note : The definition of a political party for the purpose of section 13A has been substituted as above.
9. Amendment of section 80A. - In section 80A of the Income-tax Act, in sub-section (3), for the word, figures and letters "section 80GGA", the words, figures and letters "section 80GGA or section 80GGC" shall be substituted.
Note : Section 80A is amended to provide that where, in computing the total income of an AOP or BOI, any deduction is admissible under section 80GGC, no deduction under this section shall be made in computing total income of member of AOP or BOI in relation to the share of such member in the income of AOP or BOI.
10. Insertion of new sections 80GGB and 80GGC. - After section 80GGA of the Income-tax Act, the following sections shall be inserted, namely:
`80GGB. Deduction in respect of contributions given by companies to political parties.- In computing the total income of an assessee, being an Indian company, there shall be deducted any sum contributed by it, in the previous year to any political party.
Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this section, the word "contribute", with its grammatical variation, has the meaning assigned to it under section 293A of the Companies Act, 1956 (1 of 1951).
80GGC. Deduction in respect of contributions given by any person to political parties. - In computing the total income of an assessee, being any person, except local authority and every artificial juridical person wholly or partly funded by the Government, there shall be deducted any amount of contribution made by him, in the previous year, to a political party.
Explanation. - For the purposes of sections 80GGB and 80GGC, "political party" means a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951).
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