Schedule VIII of the Income-tax Act, 2025 is read with section 12 and exempts house property income, other sources income, capital gains and voluntary contributions of a registered political party, subject to conditions.
Schedule VIII does not deal with perquisite valuation. It is read with section 12 and covers income of political parties and electoral trusts. Perquisites are defined and valued under section 17.
What Schedule VIII contains
Schedule VIII is the shortest of the exemption Schedules and the only one read with section 12 rather than section 11. Section 12 is headed 'Incomes not to be included in total income of political parties and electoral trusts'.
It replaces sections 13A and 13B of the Income-tax Act, 1961 — the political party exemption and the electoral trust exemption — bringing both into one Schedule with the familiar four-column structure.
The exempt income for a political party is wide: income chargeable under Income from house property, Income from other sources or Capital gains, and voluntary contributions received from any person. What makes it workable is the conditions column.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026 because of the repeal and savings provision in section 536. The Schedule contents described here are taken from the Act as enacted, incorporating the corrigenda notified in the Gazette on 3 September 2025.
Where each provision actually sits
| Topic | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| Political party exemption | Section 13A | Section 12 with Schedule VIII |
| Electoral trust exemption | Section 13B | Section 12 with Schedule VIII |
| Exemption gateway for others | Section 10 | Section 11 with Schedules II to VII |
| Company contributions to political parties | Section 80GGB | Section 136 |
| Any person's contributions to political parties | Section 80GGC | Section 137 |
| Advertisement in a political souvenir | Section 37(2B) | Section 34(2)(c) |
| Perquisite definition and valuation | Section 17(2) | Section 17 |
The Schedule, and the provisions around it
The structure
In computing the total income of a tax year of any eligible person being a political party or an electoral trust mentioned in column C, the income in column B is not included, subject to the conditions in column D, with defined terms in the Note below the Table.
Serial 1 — the political party exemption
The income covered is that chargeable under the head Income from house property, Income from other sources or Capital gains, or any income by way of voluntary contributions received from any person. The eligible person is a political party registered under section 29A of the Representation of the People Act, 1951.
The conditions that make it work
Column D carries the conditions — the record-keeping, audit and reporting obligations that a political party must satisfy for the exemption to apply, and the restrictions on the mode in which contributions may be received. Read column D and the Note in full; the exemption is not unconditional.
Electoral trusts
The Schedule also covers electoral trusts, carrying forward what section 13B of the 1961 Act did. The conditions govern how contributions received are to be distributed and what proportion may be retained.
The donor's side
Contributions to political parties are deductible for the donor under section 136 (companies, the old 80GGB) and section 137 (any person, the old 80GGC). Separately, section 34(2)(c) disallows expenditure on advertisement in any souvenir, brochure, tract or pamphlet published by a political party.
Where perquisite valuation actually is
If you came here for perquisites: section 17 defines perquisite in sub-section (1), lists exclusions in sub-section (2), sets conditions in sub-section (3) and carries the definitions in sub-section (4). Accommodation and several other benefits are valued in the manner prescribed by the Rules. ESOPs are valued at fair market value on the date of exercise under section 17(4)(h).
Worked example
Where each political-finance item is dealt with.
| Item | Provision | Effect |
|---|---|---|
| A registered political party's rental income | Schedule VIII, serial 1, with section 12 | Not included in total income, subject to conditions |
| Voluntary contributions received by the party | Schedule VIII, serial 1 | Not included, subject to conditions |
| A company's contribution to a political party | Section 136 | Deductible by the company |
| An individual's contribution to a political party | Section 137 | Deductible by the individual |
| A company's advertisement in a party souvenir | Section 34(2)(c) | Not deductible |
The last row is a long-standing trap. A contribution is deductible under section 136 or 137, but advertising in the same party's publication is expressly disallowed by section 34(2)(c).
Compliance checklist
- For a political party, satisfy every condition in column D of Schedule VIII; the exemption depends on them.
- Confirm registration under section 29A of the Representation of the People Act, 1951.
- Read the Note below the Table for the defined terms.
- Donors should claim under section 136 or section 137, and check section 202 for the regime position.
- Do not claim advertisement expenditure in a party publication; section 34(2)(c) disallows it.
- For perquisite valuation, read section 17 and the Rules made under the Act.
Common mistakes
- Searching Schedule VIII for perquisite valuation rules.
- Treating the political party exemption as unconditional; column D governs it.
- Claiming an advertisement in a party souvenir as a business expense.
- Confusing the donor's deduction under sections 136 and 137 with the party's exemption under section 12.
All sixteen Schedules of the Income-tax Act, 2025
Because the numbering is widely misquoted, the full list is reproduced below from the Act as enacted. Note that Schedules II to VII are all exemption lists, split by who is claiming rather than by what the income is.
| Schedule | Read with | Subject as enacted |
|---|---|---|
| I | section 9(12) | Conditions for certain activities not to constitute business connection in India |
| II | section 11 | Income not to be included in total income |
| III | section 11 | Income not to be included in total income of eligible persons |
| IV | section 11 | Income not to be included in total income of eligible non-residents, foreign companies and other such persons |
| V | section 11 | Income not to be included in total income of certain eligible persons including investment funds, business trusts and their unit holders |
| VI | section 11 | Income not to be included in total income of certain eligible persons in an International Financial Services Centre or having income therefrom |
| VII | section 11 | Persons exempt from tax |
| VIII | section 12 | Income not to be included in the total income of political parties and electoral trusts |
| IX | section 48 | Deduction for tea, coffee and rubber development accounts |
| X | section 49 | Deduction for Site Restoration Fund |
| XI | section 2(91) | Recognised provident funds, approved superannuation funds and approved gratuity funds |
| XII | section 51 | Minerals, and groups of associated minerals |
| XIII | section 45(2) | List of articles or things |
| XIV | section 55 | Insurance business |
| XV | section 123 | Deduction for life insurance premia, contribution to provident fund, subscription to certain equity shares, etc. |
| XVI | section 350 | Permitted modes of investment or deposits by a registered non-profit organisation |
This is an explanatory guide, not tax advice, and it does not reproduce the section in full. Read the bare text of the section before you rely on it, and check for later amendments, the Income-tax Rules made under the new Act, and CBDT circulars and notifications.