EC seeks end to nameless donations

Poll panel has proposed a series of electoral reforms, including tighter waiver of income tax

December 19, 2016 12:24 am | Updated 12:24 am IST - New Delhi:

Seeking to stop financing of election campaigns using black money, the Election Commission has urged the government to amend laws to ban anonymous contributions of Rs. 2,000 and above made to political parties.

There is no constitutional or statutory prohibition on receipt of anonymous donations by political parties. But there is an “indirect partial ban” on anonymous donations through the requirement of declaration of donations under Section 29C of the Representation of the People Act, 1951. But, such declarations are mandated only for contributions above Rs. 20,000.

As per the amendment proposal, sent by the commission to the government, and made part of its compendium on proposed electoral reforms, “Anonymous contributions above or equal to the amount of Rs. 2,000 should be prohibited.”

Note ban impact

Revenue Secretary Hasmukh Adhia clarified that political parties could not accept old 500 and 1,000 rupee notes as donations as both these bills have ceased to be legal tender.

“All reports on the alleged privilege to political parties are false & misleading. Political parties have not been granted any exemption or privilege, post demonetisation & introduction of Taxation Amendment Act, 2016,” he said in a series of tweets.

“Post-demonetisation, no political party can accept donations in Rs 500 and Rs 1,000 notes since they were rendered illegal tenders. If there is any discrepancy, political parties are as liable to be questioned by IT authorities as is anyone else. They enjoy no immunity,” Mr. Adhia added.

I-T exemption caveat

The poll panel has also proposed that exemption of income tax should be extended only to political parties that contest elections and win seats in Lok Sabha or Assembly polls.

Section 13A of the Income-Tax Act, 1961 confers tax exemption to political parties for income from house property, voluntary contributions, capital gains and other sources.

Only income under the head ‘salaries and income from business or profession’ are chargeable to tax in the hands of political parties in India.

The commission said, “There could be cases where political parties could be formed merely for availing of provisions of income tax exemption if the facility, that are at the expense of the public exchequer, is provided to all political parties.”

Donors for coupons

In yet another recommendation to check blackmoney, the EC has asked the Law Ministry to ensure that political parties are made to register details of donors for coupons of all amounts on the basis of a Supreme Court order of 1996.

Coupons are one of the ways devised by the political parties for collecting donations and hence are printed by the party itself. There is no limit as to how many coupons can be printed or its total quantum. — PTI

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