Electoral trusts

November 10, 2023

Under the scheme notified by government on January 31, 2013, any company registered under Section 25 of the Companies Act, 1956, can form an electoral trust.
Under Section 17CA of the Income-tax Act, 1961, any citizen of India, a company registered in India, or a firm or Hindu Undivided Family or association of persons living in India, can donate to an electoral trust.
The electoral trusts have to apply for renewal every three financial years.
They must donate 95% of contributions received in a financial year to political parties registered under the Representation of the People Act, 1951.
The contributors’ PAN (in case of a resident) or passport number (in case of an NRI) is required at the time of making contributions.
The electoral trusts route is transparent on contributors and beneficiaries.
Where there is only one contributor and one beneficiary of a particular trust, the public can know for sure who is funding whom.