Rules for functioning of an electoral trust

Contributions (sub-rules 2 to 6). It may receive voluntary contributions from an Indian citizen, a company registered in India, or a firm, Hindu undivided family, association of persons or body of individuals resident in India. It accepts contributions only by account payee cheque or draft or electronic transfer, never cash, and not without the PAN of a resident contributor or the passport number of a non-resident Indian citizen. A receipt giving the contributor's details, amount and mode, the trust's name and PAN, and the date and number of approval is issued immediately. It does not accept contributions from a non-citizen or foreign entity, from another electoral trust registered as a section 8 company and approved under the Electoral Trusts Scheme, 2013, from a Government company, or from a foreign source under the Foreign Contribution (Regulation) Act, 2010.

Distribution and spending (sub-rules 7 to 10). Funds go only to eligible political parties, meaning parties registered under section 29A of the Representation of the People Act, 1951, and the trust obtains a receipt from each. For managing its affairs it may spend up to 5% of the year's total contributions, subject to a cap of Rs. 5,00,000 in the first year and Rs. 3,00,000 in later years. The distributable contributions for a tax year — contributions received plus any earlier surplus, less management spending — are distributed to eligible parties before 31 March of that tax year, and at least 95% of the total contributions received plus brought-forward surplus must be distributed. No contribution is used for the direct or indirect benefit of members of its committees or board, their relatives, contributors, persons referred to in section 355(h), or any concern in which they have a substantial interest.

Records and reporting (sub-rules 11 to 17). The trust keeps books and a list of contributors and recipients with names, addresses, PANs and payment details, and records of meetings and decisions. Its accounts are audited by an accountant under section 515(3)(b), and the audit report with its Annexure is furnished in Form No. 181 to the Director General of Income-tax (Systems) by the section 263(1)(c) due date, electronically (under digital signature if the return must be, otherwise through electronic verification code), together with a certified copy of the list of contributors and of the parties to whom sums were distributed. Any change in shareholders after approval under the Scheme is intimated to the Board within thirty days.