AAP Tax Law

Representation of the People Act, 1951 | Part IVA - Registration of Political Parties

Section 29B: Political Parties Entitled to Accept Contributions

Section 29B of the Representation of the People Act, 1951 regulates voluntary contributions to political parties in India. It permits eligible contributions, subject to company law and restrictions on government companies, specified public bodies and foreign sources.

Section 29B: Statutory provision and legal framework

The central rule in Section 29B is that a political party may accept a contribution voluntarily offered by a permissible person or company, subject to the applicable provisions of company law. A Government company cannot make a contribution under this provision. The proviso bars contributions from a foreign source within the meaning of the applicable foreign-contribution law.

Important legislative context: The source text of this page refers to the Companies Act, 1956 and the Foreign Contribution (Regulation) Act, 1976. Those are historical statutory references. The Companies Act, 2013 and the Foreign Contribution (Regulation) Act, 2010, together with amendments and applicable judicial decisions, must also be consulted for present-day compliance. The historical text should not be treated as a complete statement of the current regulatory regime.

Who can contribute to a political party?

Political party: For the purposes of Part IVA, registration is governed by Section 29A. Section 29B concerns the sources from which a political party may lawfully receive voluntary contributions.

Contribution: The term encompasses donations and subscriptions and is read with the statutory explanation and the relevant company-law provisions. Whether a particular transfer or benefit constitutes a contribution must be assessed under the applicable legislation.

Person: Section 29B draws upon the definition in Section 2(31) of the Income-tax Act, 1961, subject to statutory exclusions. The expression is broader than an individual donor, but not every entity is eligible to contribute.

Restrictions on political donations

  • Government companies: Contributions by Government companies are excluded; applicable company law also regulates political contributions by companies.
  • Government-funded bodies: The statutory definition of eligible persons excludes local authorities and artificial juridical persons wholly or partly funded by the Government.
  • Foreign sources: Political parties cannot receive prohibited foreign contributions. The definition and relevant exceptions under the Foreign Contribution (Regulation) Act, 2010, as amended, require separate examination.
  • Company contributions: Section 182 of the Companies Act, 2013 and judicial decisions govern eligibility, approvals, disclosure and applicable limitations. The Supreme Court's electoral-bonds judgment of 15 February 2024 struck down the 2017 removal of the company-contribution cap and the related nondisclosure changes.
  • Electoral bonds: The Supreme Court invalidated the Electoral Bond Scheme in February 2024. It must not be presented as a currently available lawful donation mechanism.

Section 29B and Section 29C: Difference

Section 29B concerns whether a political party is entitled to receive a contribution from a particular source. Section 29C separately addresses declarations of contributions received by political parties, including applicable reporting requirements and thresholds. Permission to accept a donation does not dispense with reporting or accounting obligations.

Practical compliance considerations

  • Verify the donor's legal status and whether it is a prohibited Government or foreign source.
  • For corporate donors, check current company-law eligibility, board approvals, limits and disclosure duties.
  • Maintain donation records and comply with the Election Commission's applicable instructions and reporting requirements.
  • Consider applicable tax provisions and the latest judicial decisions before accepting or reporting contributions.

Official legislation and election resources

The legality of a specific contribution depends on the law in force at the time of the transaction and any applicable court orders, rules and Election Commission directions.