Congress alleges I-T Dept withdrew 65cr from its accounts: Do political parties have to pay Income tax?

Subject: Polity

Section: Elections

Context:

The Congress party alleged that the Income Tax Department instructed banks to transfer over Rs. 65 crore from the accounts of the Congress, the Youth Congress (IYC) and the National Students’ Union of India (NSUI).

Are political parties required to pay income tax?

The Income Tax Act, 1961, exempts political parties registered by the Election Commission under the Representation of the People Act, 1951 from paying income tax, with some conditions.
Section 13-A of the Act, pertains to special provision relating to incomes of political parties,
These provisions say that any income under the heads of income from house property, income from other sources, capital gains and income from voluntary contributions shall not be included in the total income of the previous year of the party.
This is the case, provided that the party maintains books of account and other documents that would enable the Assessing Officer to “properly deduce its income”; maintains a record of all contributions above Rs. 20,000 each; has its accounts audited by an accountant; and does not accept any donation above Rs. 2,000 each in cash.
The exemption is valid as long as the treasurer of the party or any other person authorized by the party submits a declaration of its donations to the Election Commission before the due date of filing Income Tax returns.

Are political parties required to file Income Tax returns?

Parties are required to file their returns if their total income, before taking into account the exemptions under Section 13A, is higher than the income tax exemption limit.
Section 139 (4B) says if the total income in respect of which the political party is assessable (the total income for this purpose being computed under this Act without giving effect to the provisions of section 13A) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form.