The Union Law Ministry is seriously examining a proposal of the Election Commission to amend Form 24A, which makes it mandatory for political parties to file details every year of funds/donations they receive in excess of Rs.20,000.

This follows reports that some parties receive funds from foreign corporate bodies and agencies as “contributions or donations” through various channels in violation of rules. Sources in the Ministry said the Commission has suggested that the limitation of Rs.20,000 be removed to make it mandatory for parties to show on record all voluntary donations, irrespective of the sum. Likewise, the parties should be asked to file a declaration that they did not receive funds from foreign agencies/corporates and from any government body/agency in India.

It is common that big corporates, to ensure that they stayed in the good books of the ruling party, as well as main opposition parties, donate heavily during polls. According to reports, some parties, which receive such “contributions” route them for different purposes that include personal use such as buying jewellery, house, property, etc., violating the Income-Tax Act.

Under Section 13A of the Income Tax Act, parties get all voluntary contributions above Rs. 20,000 exempted from tax. Recently, based on RTI applications, there were reports that during 2007-08 and 2008-09, the Bharatiya Janata Party received the maximum voluntary contribution (Rs. 297 crore), followed by the Bahujan Samaj Party (Rs. 202 crore) and the Congress (Rs. 72 crore) as part of their income. The BSP declared that it did not receive a single voluntary contribution in excess of Rs. 20,000, though the total contributions it received were Rs. 202 crore in both fiscals.