Ban anonymous donation of above Rs 2,000 to political parties, says EC
New Delhi: Seeking to check the use of blackmoney and money laundering in politics, the Election Commission has recommended that the government amend laws to allow exemption from tax only to parties that win seats in elections and ban anonymous contributions of Rs 2,000 and above to parties.
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.
Only income under the head ‘salaries and income from business or profession’ are chargeable to tax in the hands of political parties. The EC has now proposed that exemption of income tax should only be extended to parties that contest polls and win seats in Lok Sabha or Assembly polls.
It 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 parties.”
Maintain donors’ list: EC to parties
There is also 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 proposed amendment, sent by the Commission to the government, “anonymous contributions above or equal to the amount of Rs 2,000 should be prohibited”.
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 SC order of 1996. Coupons are one of the ways devised by the political parties for collecting donations.
