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Political Contribution is one of the intense debates for years. To constitute Political Contribution, such contribution must be to Political Parties (other organisations of political nature are excluded). This section say that “political party” means a political party registered under section 29A of the Representation of the People Act, 1951.

Limit on Political Contribution (Section 182, Sub – section 1)

A company, other than a Government company and a company which has been in existence for less than three financial years may contribute any amount directly or indirectly to any political party. The aggregate of the amount which may be so contributed by the company in any financial year shall not exceed seven and a half per cent of its average net profits during the three immediately preceding financial years. No such contribution shall be made by a company unless a resolution authorising the making of such contribution is passed at a meeting of the Board of Directors and such resolution shall be deemed to be justification in law for the making and the acceptance of the contribution authorised by it.

Constituent of Political Contribution (Section 182, Sub – section 2)

In addition to direct donation, indirect donations and expenses are also constitute political donations.

(a)  a donation or subscription or payment caused to be given by a company on its behalf or on its account to a person who, to its knowledge, is carrying on any activity which, at the time at which such donation or subscription or payment was given or made, can reasonably be regarded as likely to affect public support for a political party shall also be deemed to be contribution of the amount of such donation, subscription or payment to such person for a political purpose;

(b) the amount of expenditure incurred, directly or indirectly, by a company onan advertisement in any publication, being a publication in the nature of a souvenir, brochure, tract, pamphlet or the like, shall also be deemed,—

  1. where such publication is by or on behalf of a political party, to be a contribution of such amount to such political party, and
  2. where such publication is not by or on behalf of, but for the advantage of a political party, to be a contribution for a political purpose.

Disclosure of Political Contribution (Section 182, Sub – section 3):

Every company shall disclose in its Profit and Loss Account any amount or amounts contributed by it to any political party during the financial year to which that account relates, giving particulars of the total amount contributed and the name of the party to which such amount has been contributed.

Contravention to this Section (Section 182, Sub – section 4):

If a company makes any contribution in contravention of the provisions of this section, the company shall be punishable with fine which may extend to five times the amount so contributed and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months and with fine which may extend to five times the amount so contributed.

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