{"id":6892,"date":"2020-04-16T20:25:20","date_gmt":"2020-04-16T14:55:20","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=6892"},"modified":"2022-12-01T11:26:51","modified_gmt":"2022-12-01T05:56:51","slug":"prohibitions-and-restrictions-regarding-political-contributions","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/prohibitions-and-restrictions-regarding-political-contributions\/","title":{"rendered":"Prohibitions and Restrictions Regarding Political Contributions"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In India, every political party is seen\ncompeting with each other to seek the support of the public for votes. The\namount of money spent on the campaign by each political party is undoubtedly\nhuge. The political parties raise funds from many resources, and one such\nsource is the contributions made by the corporate sectors. Such contributions are\ntermed as a Political Contributions.<\/p>\n\n\n\n<p>The topic is all about what political\ncontribution is and what are the prohibition and restrictions regarding\nPolitical Contribution.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/prohibitions-and-restrictions-regarding-political-contributions\/#Political_Contributions_%E2%80%93_An_Overview\" >Political Contributions \u2013 An Overview<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/prohibitions-and-restrictions-regarding-political-contributions\/#Political_Contributions_%E2%80%93_Prohibitions_and_Restrictions\" >Political Contributions &#8211; Prohibitions and Restrictions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/prohibitions-and-restrictions-regarding-political-contributions\/#Tax_Benefits_to_the_companies_on_Political_Contributions\" >Tax\nBenefits to the companies on Political Contributions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/prohibitions-and-restrictions-regarding-political-contributions\/#Criteria_to_claim_the_tax_benefits_under_Section_80GGB\" >Criteria\nto claim the tax benefits under Section 80GGB<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/prohibitions-and-restrictions-regarding-political-contributions\/#Takeaway\" >Takeaway<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Political_Contributions_%E2%80%93_An_Overview\"><\/span>Political Contributions \u2013 An Overview<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Political contributions mean contributions\ngiven to any political party or any person for political purposes directly or\nindirectly, whether in cash or kind.<\/p>\n\n\n\n<p><strong><em>Section 182 of Companies Act, 2013<\/em>,<\/strong> governs the political contributions and the Prohibitions and restrictions regarding the Political Contributions.<\/p>\n\n\n\n<p><strong>Analysis of Section 182 of the Companies Act\n2013<\/strong><\/p>\n\n\n\n<ul><li><strong>Applicability &#8211; <\/strong>Applicable\nto all types of companies.<\/li><li><strong>Limit of Contribution &#8211; <\/strong>There\nis no limit on Political Contribution.<\/li><li><strong>Approvals Required &#8211; <\/strong>Board\nResolution is required for Political Contribution.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Exception &#8211; Not Allowed to Certain Companies<\/h3>\n\n\n\n<ul><li>Government Companies and <\/li><li>The companies which have been in existence for\nless than 3 years.<\/li><\/ul>\n\n\n\n<p><strong><em>Section\n182(1) &#8211; The companies other than Government Companies and the companies which\nhave been in existence for less than 3 years can contribute any amount as\nPolitical contributions to any political party whether directly or indirectly.<\/em><\/strong><\/p>\n\n\n\n<div class=\"shadow1\"><strong>Note:<\/strong> A Board Resolution is also required to be passed before making the political contribution.<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Political_Contributions_%E2%80%93_Prohibitions_and_Restrictions\"><\/span>Political Contributions &#8211; Prohibitions and Restrictions <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Before\nmaking a political contribution, every company shall comply with the following\nrequirements &#8211; <\/em><\/strong><\/p>\n\n\n\n<ul><li><strong>Passing of Board Resolution &#8211; <\/strong>Before making any political contribution, every company is required to pass a Board resolution. Board Resolution authorizes the making of political contributions at the BOD meeting.<\/li><\/ul>\n\n\n\n<ul><li><strong>Types of Political Contribution &#8211; <\/strong>Is\ncovered under the ambit of Section <strong>182(2) &#8211; <\/strong>Types of political contributions\nare-<\/li><\/ul>\n\n\n\n<ul><li>Any amount\nof expenditure incurred (directly or indirectly) by a company on advertisements\nin any publication by or on behalf of a political party. It can be in any form,\ni.e. (a memento, brochure, pamphlet, etc.)<em><\/em><\/li><li>Any amount\nof expenditure incurred on advertisements in any compendium, where such\npublication is not by or on behalf of but for the advantage of a political\nparty.<em><\/em><\/li><li>A donation or\nsubscription or payment caused to be given by a company on its behalf or\/its account\nto a person who as per the company\u2019s knowledge, is performing on such activity\nwhich can rationally be regarded as likely to affect public support for a\npolitical party.[Section 182 (2) (a)]<strong><\/strong><\/li><\/ul>\n\n\n\n<ul><li><strong>Disclosure requirement-Section 182(3) &#8211; <\/strong>A\nproper disclosure shall be made by the company in the Profit and loss account of\nthe amount so contributed by the company during the financial year. Additionally,\nthe name of the political party shall also be mentioned in the P&amp;L\nAccounts.<\/li><\/ul>\n\n\n\n<ul><li><strong>Manner of Payment-Section 182(3A) &#8211; <\/strong>For\nmaking the political contributions, a company can only use the Banking\nchannels. It cannot be made in cash.<\/li><\/ul>\n\n\n\n<p><strong><em>Banking\nchannels means &#8211;<\/em><\/strong><\/p>\n\n\n\n<ul><li><em>A<\/em><strong><em> <\/em><\/strong><em>cheque is drawn on a bank (Account Payee) or<\/em><\/li><li><em>A bank draft (Account Payee)or <\/em><\/li><li><em>Use of an E-clearing system through a bank account.<\/em><\/li><\/ul>\n\n\n\n<div class=\"shadow1\"><strong>Note:<\/strong>Section 182 (3A) Notwithstanding anything contained in sub-section (1), the contribution under this section shall not be made except by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account: <br>\nProvided that a company may contribute through any instrument, issued pursuant to any scheme notified under any law for the time being in force, for contribution to the political parties.<\/div>\n\n\n\n<ul><li><strong>Penal Provision for contravening the provisions of the section &#8211; <\/strong>In case of contravention of the provisions, the company shall be punishable with fine which may extend to 5 times of the amount contributed by the company as a political contribution and every officer who is in default shall be punishable with imprisonment for a period which may extend to 6 months and with fine which may extend to 5 times of the amount contributed by the company as political contributions.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax_Benefits_to_the_companies_on_Political_Contributions\"><\/span><strong>Tax\nBenefits to the companies on Political Contributions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>All the\ncompanies (except a government company and a\ncompany that is in existence for less than 3 years) making political\ncontributions can claim a tax deduction under <strong>Section 80GGB.<\/strong><\/p>\n\n\n\n<p><strong>Section\n80GGB is <\/strong>meant for providing tax\ndeductions to Indian companies, on making donations to the registered political\nparties or an electoral trust. <\/p>\n\n\n\n<div class=\"shadow1\"><strong>Note:<\/strong>There\nis no specified limit for making the political contributions, any amount\ncontributed can be claimed for a tax deduction.<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Criteria_to_claim_the_tax_benefits_under_Section_80GGB\"><\/span><strong>Criteria\nto claim the tax benefits under Section 80GGB <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>To claim the tax benefit under section 80GGB, the political contributions made by the company through banking channels shall be considered. The contribution should never be in cash. This is done to ensure that the money being donated to a political party is maintained in records.<\/li><li>The political contributions shall be made to a political party registered under <strong>Section 29A of Representation of the People Act, 1951<\/strong>. Donations made to the electoral <a href=\"https:\/\/corpbiz.io\/trust-registration\"><strong>trust<\/strong><\/a> are also eligible for claiming the deduction (Section 80GGB).<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Takeaway\"><\/span><strong>Takeaway<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A company can make political contributions to the polities\u2019 parties and can claim the tax benefit under section 80GGB. It is required to comply with all the requirements mentioned in Section 182 of the <strong>Companies Act, 2013<\/strong><sup><a href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/acts-rules\/ebooks.html\"><strong>[1]<\/strong><\/a><\/sup>. This section provides the manner of making the political contribution, Disclosure in the Profit and Loss Account. Further, it also provides the penal Provision in case of contravention of section.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/deduction-under-section-80ggb-and-80ggc-of-income-tax-act\/\">Section 80GGB and Section 80GGC: Tax Deductions from Donations to Political Parties\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In India, every political party is seen competing with each other to seek the support of the public for votes. The amount of money spent on the campaign by each political party is undoubtedly huge. The political parties raise funds from many resources, and one such source is the contributions made by the corporate sectors. [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":6895,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[272],"tags":[494],"acf":{"service_id":"283"},"authorName":"Priyanka Bajpayee","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/03\/IMG-20220303-WA0005.jpg","authorDescription":"A Company Secretary together with PG in international Business, she has gained significant experience as legal content writer. She has keen interest in doing research and writing on legal and financial subject matters. She also holds work experience in legal compliances.","postViews":14874,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6892"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=6892"}],"version-history":[{"count":16,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6892\/revisions"}],"predecessor-version":[{"id":51063,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/6892\/revisions\/51063"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/6895"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=6892"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=6892"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=6892"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}