Deduction in respect of contributions given by companies to political parties
[Section-136 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 136(1) of Income Tax Act 2025
136(1) An assessee, being an Indian company, shall be allowed a deduction for the amount contributed by it, other than by way of cash, during a tax year to a political party registered under section 29A of the Representation of the People Act, 1951 or an electoral trust.
Section 136(2) of Income Tax Act 2025
136(2) In this section, the word “contribute”, with its grammatical variations and cognate expressions shall have the same meaning as assigned to it in section 182 of the Companies Act, 2013.
FAQs on Section 136 of Income Tax Act 2025
Who is eligible to claim deduction under Section 136?
Only Indian companies are eligible to claim a deduction under Section 136 of the Income Tax Act, 2025.
From which assessment year is this provision applicable?
The provision is applicable from the assessment year commencing on or after 1st April, 2026.
What type of contributions qualify for deduction under Section 136?
Only contributions made otherwise than by way of cash are eligible for deduction.
Can a company claim deduction for cash contributions to political parties?
No, cash contributions are not eligible for deduction under Section 136.
Which entities can receive the contribution for it to be deductible?
The contribution must be made either to a political party registered under Section 29A of the Representation of the People Act, 1951 or to an electoral trust.
What is the meaning of the term “contribute” under this section?
The term “contribute” is to be interpreted as per the meaning assigned in Section 182 of the Companies Act, 2013.
Can foreign companies claim deduction under Section 136?
No, only Indian companies are allowed deduction under this section.
Is there any upper limit on the amount of contribution for deduction under this section?
Section 136 itself does not prescribe any upper limit, but limits (if any) under other applicable laws such as the Companies Act, 2013, may apply.
Is donation to an unregistered political party eligible for deduction?
No, deduction is allowed only if the political party is registered under Section 29A of the Representation of the People Act, 1951.
Is contribution to an individual candidate eligible for deduction under Section 136?
No, only contributions to registered political parties or electoral trusts are covered.
Are in-kind (non-monetary) contributions eligible for deduction?
Yes, as long as the contribution is not made in cash, it may be eligible, subject to interpretation aligned with the term “contribute” as per the Companies Act, 2013.
Is any documentary proof required to claim the deduction?
Yes, companies must maintain proper records and proof of contribution, such as receipts or confirmations from the political party or electoral trust.
Can a company claim deduction if the contribution was made through a third party?
Only direct contributions to the political party or electoral trust are eligible; routing through a third party may not qualify.
Is it mandatory to disclose such contributions in the income tax return?
Yes, disclosure of political contributions is typically required in the tax return or in the prescribed audit report formats.
Are contributions to electoral trusts also deductible under this section?
Yes, contributions to electoral trusts are specifically included under Section 136.
Does the mode of payment affect the eligibility for deduction?
Yes, the contribution must be made by a mode other than cash to qualify for deduction.
Can LLPs or partnership firms claim this deduction?
No, only Indian companies are eligible under Section 136.
Are anonymous contributions by companies allowed for deduction?
No, transparency and traceability are essential; anonymous contributions are generally not eligible.
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