Electoral Trust AY 2026-27
Introduction
An electoral trust is a trust approved by the Central Board of Direct Taxes (CBDT) under the Electoral Trusts Scheme, 2013. Voluntary contributions received by such a trust are excluded from its total income if specific conditions under Section 13B of the Income-tax Act are met.
Tax Exemption under Section 13B
Voluntary contributions received by an electoral trust are exempt from tax if:
(a) At least 95% of the aggregate donations received, along with any surplus brought forward from earlier years, are distributed to political parties registered under Section 29A of the Representation of the People Act, 1951; and
(b) The trust functions in accordance with Rule 17CA of the Income-tax Rules.
Eligible Contributors
An electoral trust may accept voluntary contributions only from:
(a) Individuals who are citizens of India
(b) Companies registered in India
(c) Resident firms, HUFs, AOPs, or BOIs
Prohibited Contributors
Contributions shall not be accepted from:
(a) Non-citizens of India
(b) Foreign entities
(c) Other electoral trusts approved under the scheme
(d) Government companies
(e) Foreign sources as defined in the Foreign Contribution (Regulation) Act, 2010
Mode of Accepting Contributions
All contributions must be received by account payee cheque, account payee bank draft, or electronic transfer. Cash contributions are strictly prohibited. PAN or passport number (for non-resident Indian citizens) must be furnished by contributors.
Issuance of Receipt
The trust must issue a receipt to each contributor containing prescribed particulars, including the contributor’s name and address, PAN/passport number, contribution details, electoral trust information, approval details, etc.
Limit on Administrative Expenses
The trust may spend up to 5% of the contributions for administrative purposes, subject to a cap of:
(a) Rs. 5,00,000 in the first year of incorporation; and
(b) Rs. 3,00,000 in each subsequent year.
Computation and Distribution of Surplus
Distributable surplus = Total contributions received + Brought forward surplus − Administrative expenses
At least 95% of this amount must be distributed to eligible political parties by 31st March of the financial year. Receipts from political parties must be obtained, which indicate the name, PAN and registration number of the political party, the amount of funds, date of receipt, and name and designation of the signing person.
Restrictions on Utilisation
No contribution shall be used for the direct or indirect benefit of the following persons:
(a) Members, including members of the Executive Committee, the Governing Committee or the Board of Directors, of the electoral trust
(b) Relative of such Members
(c) If a member or contributor is a HUF, a member of that HUF
(d) Contributors
(e) Persons referred under Section 13(3)
(f) Entities where the above persons hold a substantial interest
Maintenance of Records
The trust must be kept and maintained:
(a) Books of account and supporting documents in respect of its receipts, distributions and expenditures
(b) Lists of contributors and political parties
(c) Details of receipt and payment
(d) Record of proceedings of all meetings and decisions taken
Audit and Reporting
Accounts of electoral trust must be audited by a Chartered Accountant. An audit report (Form 10BC with annexures) must be filed electronically with the jurisdictional CIT/DIT on or before the due date for filing the return of income under Section 139. A certified copy of the list of contributors and recipient political parties must accompany the audit report.
Intimation of Change in Shareholding
Any change in shareholders, the grant of approval under the Electoral Trusts Scheme, 2013, must be intimated to the CBDT within 30 days.