ELECTORAL TRUSTS
SCHEME, 2013
Notification No. 9/2013, [F. NO.
142/20/2012-TPL], dated 31.01.2013
In exercise of
the powers conferred by clause (22AAA) of section 2 of the Income-tax Act, 1961
(43 of 1961), the Central Government hereby makes the following scheme for
approval of electoral trusts, namely:-
Short title,
commencement and application
1. (1) This Scheme
may be called the Electoral Trusts Scheme, 2013.
(2) It shall
come into force on the date of its publication in the Official Gazette.
(3) The scheme
shall apply for the approval of any electoral trust under clause (22AAA) of section
2 of the Act.
Objectives of
the Scheme
2. To lay down a
procedure for grant of approval to an electoral trust which will receive voluntary
contributions and distribute the same to the political parties.
Definitions
3. In this Scheme
unless the context otherwise requires,-
(a) "Act" means the
Income-tax Act, 1961 (43 of 1961);
(b) "Rules" means the
Income-tax Rules, 1962;
(c) "Scheme" means the
Electoral Trusts Scheme, 2012; and
(d) the words and expressions
used herein but not defined and defined in the Act shall have the same meanings
as assigned to them in the Act.
Eligibility
4. A company
registered for the purposes of section 25 of the Companies Act, 1956 (1 of
1956) satisfying all of the following conditions shall be eligible to make an
application for approval as an electoral trust, namely:-
(a) the company is registered on
or after the 1st day of April, 2012 for the purposes of section 25 of the
Companies Act, 1956 (1 of 1956);
(b) the name of the company
registered for the purposes of section 25 of the Companies Act, 1956 (1 of
1956) shall include the phrase "electoral trust";
(c) the sole object of the
electoral trust is to distribute the contributions received by it to the
political party, registered under section 29A of the Representation of the
People Act, 1951(43 of 1951); and
(d) the electoral trust shall
have a permanent account number.
Procedure for
approval
5. (1) The
procedure for approval of an electoral trust shall be as follows, namely: —
(a) the
application for approval under clause (22AAA) of section 2 of the Act shall be
made in duplicate in FORM A, on or before the 31st day of July of the previous
year relevant to the assessment year for which the approval is sought, to the
Commissioner of Income-tax or the Director of Income-tax, as the case may be,
having jurisdiction over the applicant;
(b) the applicant shall also send
a copy of the application to the Member (Income-tax), Central Board of Direct
Taxes accompanied by the acknowledgement receipt evidencing submission of
application form in duplicate to the Commissioner of Income-tax or Director of Income-tax,
as the case may be, having jurisdiction over the case ;
(c) if any defect is noticed in
FORM A or any document referred to therein is not attached with it, the
Commissioner of Income-tax or the Director of Income-tax, as the case may be,
shall intimate the defect to the applicant within thirty days from the date of
receipt of the application form in his office;
(d) the applicant shall remove
the defect within a period of fifteen days from the date of such intimation or
within such further period which, on an application made in this behalf, may be
extended. However, the total period for removal of defect shall not exceed
thirty days;
(e) if the applicant fails to
remove the defect within the period so allowed, the Commissioner of Income-tax
or the Director of Income-tax, as the case may be, shall send his
recommendation to the Member (Income-tax), Central Board of Direct Taxes for
treating the application as invalid;
(f) the Central Board of Direct
Taxes, if satisfied, may pass an order treating the application as invalid;
(g) if the application form is
complete in all respects, the Commissioner of Income-tax or the Director of
Income-tax, as the case may be, may make such inquiry as he may consider
necessary regarding the genuineness of the electoral trust and send a report to
the Member (Income-tax), Central Board of Direct Taxes for grant of approval or
rejection of the application;
(h) the Central Board of Direct
Taxes may, on receipt of the report referred to in sub-clause (g), call for
such documents or information from the applicant, any authority or other person
as it may consider necessary and get any further inquiry conducted in this
regard;
(i) the Central Board of Direct
Taxes shall, after considering all the information in its possession and the
result of enquiry conducted, if any, grant approval to the electoral trust or
reject the application;
(j) the Central Board of Direct
Taxes may also impose any conditions, subject to which the approval shall be
valid;
(k) no order treating the
application as invalid or rejecting the application or withdrawing the approval
shall be passed by the Central Board of Direct Taxes without giving the
applicant an opportunity of being heard and without recording the reasons for
the same in writing;
(l) the order of approval or
rejection shall be passed by the Central Board of Direct Taxes within six
months from the end of the month in which the application form was received
from the applicant in the office of Member (Income-tax), Central Board of
Direct Taxes;
(m) the period of limitation of
six months referred to in sub-clause (1) shall exclude the period beginning
from the date of the intimation of the defect under clause (c) by the
Commissioner of Income-tax or the Director of Income-tax, as the case may be,
to the date the applicant removes such defect;
(n) a copy of the order
invalidating or rejecting the application or withdrawing the approval shall be
sent to the applicant, the Assessing Officer and the Commissioner of Income-tax
or the Director of Income-tax, as the case may be;
(o) the approval shall be valid
for the assessment year relevant to the financial year in which such
application has been made and for a further period, not exceeding three
assessment years, as may be specified in such approval.
(2) The
application in FORM A shall be accompanied by the following documents, namely:-
(a) an attested copy of the
certificate evidencing the registration of the company for the purposes of
section 25 of the Companies Act, 1956 (1 of 1956);
(b) a certified copy of the
memorandum and articles of association;
(c) complete name, permanent
account number and address of the electoral trust and its members (including
members of its Executive Committee, Governing Committee or Board of Directors);
(d) initial share capital of the
company and its source;
(e) details of beneficiaries, if
available;
(f) an undertaking in the form of
an affidavit stating that the receipts shall be distributed only to the
political parties registered under section 29A of the Representation of the
People Act, 1951 (43 of 1951); and
(g) copy of accounts of the
applicant for the last one, two or three years, as may be applicable.
(3) Any change
in the shareholders, subsequent to the approval granted under the Scheme, shall
be intimated to the Board within thirty days of the change.
Criteria for
approval
6. An electoral
trust shall be considered for approval if it fulfils all of the following conditions, namely: —
(a) the
company registered for the purposes of section 25 of the Companies Act, 1956 (1
of 1956), which satisfies the conditions referred to in paragraph 4 of this
Scheme;
(b) the
object of the electoral trust shall not be to earn any profit or pass any
direct or indirect benefit to its members or contributors, or to any person
referred to in sub-section (3) of section 13 of the Act, or any person referred
to in sub-rule (10) of rule 17CA of the Rules;
(c)
it has made adequate arrangement for recording the receipts from the
contributors in accordance with rule 17CA; and
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