An MP or MLA's salary is fully taxable at normal slab rates, but their constituency, daily, office and travelling allowances are exempt under Section 10(17). A political party registered with the Election Commission is fully exempt under Section 13A. Politicians file a normal ITR, must disclose assets in Schedule AL if total income exceeds Rs50 lakh, and choose between the default new regime and the old regime.
What a Politician's Income Is Taxed — Decision Table
Every common income stream of an MP, MLA or their political party, with its tax status and the governing section under the Income-tax Act, 2025.
| Income Type | Tax Status | Section |
|---|---|---|
| MP basic salary (~Rs1 lakh/month) | Taxable · slab | Salary head |
| MLA salary (state pay scale) | Taxable · slab | Salary head |
| Constituency allowance | Exempt | Section 10(17) |
| Daily allowance (sessions) | Exempt | Section 10(17) |
| Office / secretarial allowance | Exempt | Section 10(17) |
| Committee allowance (of the House) | Exempt | Section 10(17) |
| Former MP / MLA pension | Taxable · pension | Salary / other sources |
| Rental income from property | Taxable | House property |
| Business / professional income | Taxable | Business / profession |
| Capital gains on asset sale | Taxable | Capital gains |
| Agricultural income | Exempt* | Sec 10(1) · must disclose |
| Registered political party income | Exempt | Section 13A |
* Agricultural income is exempt but must be disclosed and is used for rate-purposes (partial integration) if non-agricultural income crosses the basic exemption. Verify current section text on incometax.gov.in.
Section 10(17) — Salary Taxed, Allowances Exempt
MPs are paid under the Salary, Allowances and Pension of Members of Parliament Act; MLAs under the corresponding state Act. The salary component is taxable, but a specific set of duty-related allowances is exempt under Section 10(17) — this is what separates a politician's pay from an ordinary salaried employee.
Taxed at normal slab rates
- MP / MLA basic salary
- Former MP / MLA pension
- Rental, business & professional income
- Capital gains and interest income
- No standard deduction on the MP-Act salary (it is not “salary” from an employer)
Exempt under Section 10(17)
- Constituency allowance
- Daily allowance for attending sessions
- Office / secretarial expense allowance
- Allowance as a member of a House committee
- Only the listed allowances — nothing beyond them
An MP/MLA is not an “employee” of any employer, so their remuneration is generally assessed as “income from other sources” rather than the salary head. That means the Rs75,000 standard deduction (new regime) or Rs50,000 (old regime) available to salaried employees does not apply to the MP-Act pay itself.
Not sure which allowances are exempt in your case?
Talk to a Tax Expert →Which Tax Regime Should a Politician Use?
For AY 2026-27 the new regime is the default. Under it, tax is nil on taxable income up to Rs12,00,000 after the Section 87A rebate. The old regime (optional) keeps Chapter VI-A deductions such as 80C, 80D and 80GG, and lets donors claim 80G / 80GGC for political donations.
| Taxable income (AY 2026-27) | New regime | Old regime |
|---|---|---|
| Up to Rs2,50,000 | Nil | Nil |
| Rs2.5L – Rs4L | Nil | 5% |
| Rs4L – Rs8L | 5% | 5% / 20% |
| Rs8L – Rs12L | 10% | 20% |
| Rs12L – Rs16L | 15% | 30% |
| Rs16L – Rs20L | 20% | 30% |
| Rs20L – Rs24L | 25% | 30% |
| Above Rs24L | 30% | 30% |
New regime: Sec 87A rebate makes tax nil up to Rs12L taxable income; standard deduction Rs75,000 (salaried). Old regime: 87A rebate up to Rs5L; standard deduction Rs50,000; slabs 2.5L nil / 5% / 20% / 30%. Add 4% cess to tax in both. Rates verified against incometax.gov.in for AY 2026-27.
MP Salary — How the Tax Adds Up
Illustrative: an MP with a taxable salary of Rs12,00,000 (after removing Section 10(17) allowances) and no other income, under each regime.
New regime · Rs12L taxable
Old regime · Rs12L taxable
The example ignores 80C-type deductions; with heavy old-regime deductions the gap narrows. Model your own numbers with the old-vs-new regime calculator or the income tax calculator.
New regime suits you if
- Your allowances already cover most tax-planning needs
- You have few 80C / 80D / home-loan deductions
- Taxable income is at or below Rs12 lakh
- You want the simplest filing
Old regime suits you if
- You have large 80C, 80D, NPS or home-loan interest claims
- You want 80GG rent relief or 80G / 80GGC donations
- Deductions push effective tax below the new-regime figure
- You already itemise heavily
How Political Parties Are Taxed
A political party registered with the Election Commission is fully exempt from income tax under Section 13A on its voluntary contributions, income from house property, capital gains and other income — provided it meets the accounting and disclosure conditions. The exemption belongs to the party, not to individual politicians.
| Party income / rule | Status | Condition |
|---|---|---|
| Voluntary contributions (donations) | Exempt | Books maintained & audited |
| Income from house property | Exempt | Registered with EC |
| Capital gains | Exempt | Accounts audited by a CA |
| Interest & other income | Exempt | Return filed on time |
| Cash donation above Rs2,000 | Not allowed | Must be by banking / electoral channel |
| No name/address record of donor > Rs20,000 | Exemption at risk | Contribution report to EC needed |
Cash donations above Rs2,000 are not permitted; larger donations must come through banking channels. Electoral bonds were struck down by the Supreme Court in February 2024. Confirm current thresholds on incometax.gov.in.
- Individuals donating to a registered party can claim a deduction under Section 80GGC (old regime).
- Companies get a similar deduction under Section 80GGB.
- Cash political donations are not deductible — payment must be non-cash.
Running a registered party or trust and unsure about 13A compliance?
Get Compliance Help →ITR Filing & Asset Disclosure for Politicians
A politician files the ITR form appropriate to their income (typically ITR-2 for salary + capital gains, or ITR-3 where business income exists). Where total income exceeds Rs50 lakh, Schedule AL becomes mandatory — every immovable property, vehicle, jewellery, shareholding, cash balance and loan must be reported.
- MP / MLA salary (taxable portion)
- Rental income from all properties
- Business or professional income
- Capital gains on asset sales
- Interest & dividend income
- Agricultural income (disclose)
- Schedule AL if income > Rs50L
- Election Commission asset affidavit
- Clubbing of spouse / minor income
- Advance tax where applicable
The Election Commission cross-references the asset affidavit filed by candidates with Income-tax data. A mismatch between your ITR / Schedule AL and your EC affidavit is one of the most common triggers for scrutiny — keep both consistent and reconciled every year.
Penalties for Non-Disclosure
- Failure to file return can lead to prosecution and interest under the return-default provisions.
- Concealment of income attracts a penalty on the tax evaded, plus interest.
- Property held in another’s name can attract Benami proceedings — attachment and prosecution.
- Public servants with assets disproportionate to known income face action under the Prevention of Corruption Act.
- Undisclosed foreign assets fall under the Black Money Act, 2015 with heavy tax and penalty.
Received a notice or worried about a mismatch? Get it reviewed before you respond.
Talk to a Tax Expert →Frequently Asked Questions
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