A7/303, Saket CHSL, Saket Marg, Thane (W) 400601. # 8879528575.
December 25, 2016
The Hon. Finance Minister,
Government of India,
Sub: Request to amend Section 13 A of Income Tax Act to bring transparency on political donations.
Elections and the conduct of the legislature in India is governed under the Representation of the People Act, 1951, which empowers the Election Commission of India (ECI) to form rules for elections and political parties.
As per current rules, political parties in India are barred from undertaking any commercial activity and thus they are not deemed to be engaged in acts that make them liable to pay any income tax.
Political parties are getting away with hundreds of crores...year after year...in anonymous donations.
Much of it in cash, which the parties can deposit in a bank account without scrutiny.
Since demonetization, every day brings new announcements about how one and all honest, tax-paying Indians must adhere to the new rules and regulations regarding our own money. For the record, a time of writing this, the Reserve Bank of India has come up with 59 orders since November 10, 2016.
To their credit, people have borne it all with admirable patience.
They stood in queues for hours every day.
They felt awful as they dipped into their kids' piggy banks to meet contingencies.
They took it on the chin...for ‘nation building'.
That's because Prime Minister Modi's fight against black money, call it demonetization or notebandi, was to catch the big crooks. It's a good fight...and people were just doing their part. After all, the goal is to quash the black economy once and for all.
But in the fight against black money, a key beneficiary has been left out...the 1,866 political parties.
Yes, the fight against black money has conveniently side stepped the political parties. They enjoy privileges that the common man doesn't. It's a biased war...and people are fighting it on behalf of often corrupt political entities.
Quote of Revenue Secretary: If it is a deposit in the account of a political party, they are exempt. But if it is deposited in individual's account, then that information will come into our radar.
- Hasmukh Adhia, Revenue Secretary, Government of India.
So, this is official policy for the 1,866 political parties. This is the law of the land...Section 13A of the Income Tax Act, 1961, to be precise.
A common man has to stand in a queue...and prove he is legitimate by showing a PAN Card or some other identification. And if and when the Income Tax sleuths show up, he needs to explain every deposit he made in great detail.
The political parties, on the other hand, get a free pass.
Political parties are currently not required to publicly disclose contributions of up to Rs 20,000. This means that any political party that receives individual donations of up to Rs 20,000 in cash can deposit it in bank accounts. This money will not be investigated simply because these donations need not be publicly disclosed.
And if you thought that was it...here's a shocking statistic from the report Analysis of Income & Expenditure of National Political Parties for FY- 2014-2015 :
The BSP claims it hasn't received any donations above Rs 20,000. That's why we can't find any BSP donation details in the public domain. And this has been the party line, so to speak, for ten years now.
Yet...they get crores year after year.
But it's not just the BSP.
No public information is available on where the BJP got Rs 434.7 crores in 2014-2015, which represents about 50% of the party's total donations.
We also have no idea where the Congress gets 32% of its funding.
We are talking about hundreds of unaccounted crores every year.
Quote of Former CEC:
Many political parties are set up with the sole intention of laundering black money.
- Former Chief Election Commissioner, TS Krishna Murthy
Under Section 13A of the IT Act, political parties are exempt from paying Income Tax. But they are required to file their Income Tax Returns (ITR).
Donations below 20,000 rupees are not required to be reported to the ECI (Sec 29C, sub-section 3) but they have to be reported in the ITR. Political parties are essentially not required to disclose details of those donating below 20,000 rupees.
A Simple study of IT returns of any political party will show that maximum donations to them are from such ‘unknown’ sources.
Parties are exempted from income tax, but they still have to: a. maintain books of accounts, b. file returns, c. be open to scrutiny, even raids, etc.
Parties can take money and show them as donations below 20,000 rupees (making backdated entries showing that donations were taken before demonetisation was announced) and try to convert it into white money for a ‘cut’. This in effect is an indirect way of ' money laundering '.
The Election Commission of India has proposed that the limit for anonymous donations be reduced from Rs 20,000 to Rs 2,000.
Alert Citizens Forum of India demands that the Government should amend the Income tax act, 1961 to make rules same for donations under 20k and above 20k. It will stop all black money in Political donations. There should be transparency in political donations.
Please make all political parties donations cashless or digital/E-payment, E- Batuva.
This will go a long way in reducing corruption and enhancing the fight against Black money.
For Alert Citizens Forum of India,
Dayanand Nene Rajan Chandok
• Political activist: Bharatiya Janata Party
• National Secretary,,Consumer Protection Service Council.
Alert Team: Jitendra Satpute, Prasad Bedekar, Pramod Date, Ganesh Iyer, Kiran Joshi, Sudesh Khatawkar, Sanjiv Pande, CS Sandhya Malhotra, Swati Bedekar, Sangita Koganur, Sachin Nene, Parikshit Dhume