An electoral trust exists to do one thing: take money from donors and pass it on to political parties. Section 13B exempts its income for doing so — provided it passes on nearly all of it and keeps a proper record of both ends of the transaction.
Form 10BC is the audit report that evidences both.
At a glance
- What it is
- Audit report of an electoral trust under section 13B
- Who files
- An electoral trust approved under the Electoral Trusts Scheme
- Who signs
- A Chartered Accountant in practice
- Core condition
- Distribute at least 95% of contributions received in the year, plus surplus brought forward
- Records
- Names, addresses and PANs of contributors and of recipient parties
- Recipients
- Only political parties registered under section 29A of the Representation of the People Act, 1951
- Under the 2025 Act
- Section 12, read with Schedule VIII
What section 13B does
Voluntary contributions received by an electoral trust are not included in its total income, provided the trust meets the conditions in section 13B and the Electoral Trusts Scheme notified under it.
The structure exists so that corporate donors can contribute to the political process through a regulated intermediary rather than directly, with the trust — not the donor — deciding the split between parties.
The exemption is on contributions received, not on a general charitable footing. An electoral trust is not a charitable trust and is not governed by sections 11 and 12. Do not carry across the 85% application rule or the Form 10B/10BB analysis — different regime entirely.
The conditions
| Condition | Substance |
|---|---|
| Distribution | At least 95% of the aggregate of voluntary contributions received in the year and surplus brought forward must be distributed during the year |
| Recipients | Only political parties registered under section 29A of the Representation of the People Act, 1951 |
| Contributor records | Name, address and PAN (or passport number for a non-citizen) of every contributor |
| Recipient records | Name, address, PAN and registration number of each party receiving a distribution |
| Functioning | The trust must function in accordance with the Electoral Trusts Scheme |
| Audit | Accounts audited by an accountant, report in Form 10BC |
The 95% is computed on receipts plus brought-forward surplus, not on receipts alone. A trust that distributes 95% of the current year’s contributions but sits on money carried forward from last year can still fail the test. The arithmetic has to start from the aggregate.
What Form 10BC reports
The audit report is built around proving the two things that matter — where the money came from, and where it went:
- Approval particulars of the electoral trust
- Voluntary contributions received during the year, with contributor details
- Surplus brought forward from earlier years
- Distributions made during the year, party by party, with registration particulars
- The computation showing the distribution percentage against the aggregate
- Administrative expenses, and whether they are within the permitted limit
- Confirmation that the trust functioned in accordance with the Scheme
Administrative expenses are capped. The Scheme permits the trust to retain only a small proportion of contributions to meet its own management costs. Exceeding that ceiling is a compliance failure independent of the 95% test, and the report asks about it directly.
Why the record-keeping is the real work
Electoral trusts are small in number and simple in accounting — often a handful of receipts and a handful of payments in a year. The audit effort goes almost entirely into identification: confirming that each contributor is properly identified with a PAN, and that each recipient is a party actually registered under section 29A.
Anonymous or under-documented contributions are the failure mode. The point of the regime is traceability, so a gap in contributor identification undermines the exemption more directly than an accounting error would.
UDIN on Form 10BC
Form 10BC is an audit report, so it falls in the Audit and Assurance Functions category, where UDIN has been mandatory since 1 July 2019.
Update within 60 calendar days of upload. A report uploaded without a UDIN and left un-updated past that point is treated by the CBDT as invalid, with all due consequences of law, even after the trust has accepted it. Revocation closes at 48 hours from generation.
See our guide to UDIN generation for the process and for correcting an error found after acceptance.
Section 13B under the Income-tax Act, 2025
The 2025 Act folds political party and electoral trust exemptions together. Per ICAI’s tabular mapping:
| Subject | 1961 Act | 2025 Act |
|---|---|---|
| Income of political parties | Section 13A | Section 12, read with Schedule VIII |
| Income of electoral trusts | Section 13B | |
| Registered non-profit organisations | Sections 11, 12A, 12AB | Sections 332 to 355 |
Section 12 of the new Act is headed “Incomes not included in total income of political parties and electoral trusts”, with the detailed conditions moved into Schedule VIII. The substance carries over; the numbering does not.
Frequently asked questions
What is Form 10BC?
The audit report an electoral trust files under section 13B, covering contributions received, distributions made and compliance with the Electoral Trusts Scheme.
How much must an electoral trust distribute?
At least 95% of the aggregate of voluntary contributions received during the year plus surplus brought forward from earlier years.
Who can receive the distributions?
Only political parties registered under section 29A of the Representation of the People Act, 1951.
Does an electoral trust follow the 85% rule like a charitable trust?
No. Sections 11 and 12 do not apply. Section 13B is a separate regime with its own 95% distribution test.
What records must be kept?
Name, address and PAN of every contributor, and name, address, PAN and registration particulars of every recipient party.
Can an electoral trust accept anonymous contributions?
The regime is built on traceability, and contributor identification is a condition of the exemption. Undocumented contributions put it at risk.
Are administrative expenses allowed?
Yes, but only up to the limited proportion permitted by the Electoral Trusts Scheme.
Who signs Form 10BC?
A Chartered Accountant in practice.
Which UDIN category applies?
Audit and Assurance Functions, mandatory since 1 July 2019.
Where does section 13B sit under the Income-tax Act, 2025?
Section 12, read with Schedule VIII, which covers political parties and electoral trusts together.
In short
Form 10BC guards a narrow exemption with a simple arithmetic test and a demanding documentation test. The 95% calculation must start from receipts plus brought-forward surplus, and every rupee needs a named contributor at one end and a registered party at the other. Get the register right during the year and the audit is straightforward; reconstruct it afterwards and it is not.
Micro Advisor advises trusts and institutions on exemption compliance and statutory audit reporting.
References
Disclaimer. General information, not professional advice. The Electoral Trusts Scheme and section 13B conditions should be verified for the trust and year concerned.