PTI Reports that the Election Commission has sought a ban on anonymous contributions above Rs 2,000 to political parties
Seeking to stem the flow of black money in polls, the Election Commission has urged the government to amend laws to ban anonymous contributions of Rs 2,000 and above made to political parties. Seeking to stem the flow of black money in polls, the Election Commission has urged the government to amend laws to ban anonymous contributions of Rs 2000 and above made to political parties. While the Modi government and its representatives have made much of using the de-monetization move to claim that it is a drive against ‘black money’, the same government is loth to make itself part of a rigorous scrutiny. The opposition Congress, too appears to have joined this unholy nexus.
In April-May 2016, during and after the Budget Session, the Finance Ministry through a Budgetary declaration sought to exempt political parties from previously interpreted violations under the Foreign Contribution Regulation (FCR Act). Corporate donations from companies that were foreign but also incorporated in India were suddenly exempted from the Act. Both the BJP and Congress had been found, by the Delhi High Court to have violated the law.
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.
The Association for Democratic Reforms (ADR), an overwhelming 63 per cent of the funds received by political parties are in cash.
Only on Saturday, December 17, the government had said that political parties depositing old 500 and 1,000 rupee notes in their accounts will be exempt from income tax+ provided the donations taken are below Rs 20,000 per individual and properly documented. Revenue Secretary Hasmukh Adhia said the government is not tinkering with the tax exemption available to political parties and they are free to deposit old 500 and 1000 rupee notes in their bank accounts. But these deposits will, however, be subject to the condition that individual donations taken in cash do not exceed Rs 20,000 and are properly documented with full identity of the donor. Only income under the head 'salaries and income from business or profession' are chargeable to tax in the hands of political parties in India. Section 13A of the Income-tax Act, 1961 confers tax exemption to political parties for income from house property, income by way of voluntary contributions, income from capital gains and income from other sources.
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.
New Amendments proposed by Election Commission
As per the proposed amendment, 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 rupees two thousand should be prohibited."
The Commission has also proposed that exemption of Income Tax should only be extended to political parties that contest elections and win seats in Lok Sabha or assembly polls.