Political funding: EC drastically reduces ‘anonymous’ donations

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election commissionTo control the flow of black money, the EC has proposed a limit for political parties to accept ‘anonymous’ donations. The commission reduced the donations from Rs 20,000 to Rs 2,000.

The proposal will not only trim down the cash troves of political parties but also improve transparency in political funding.

Donations above Rs 2000 are prohibited, said the EC. By doing this, the EC said if the general public can feel the pinch of demonetisation, political parties too should be part of it.

The Election Commission (EC) also wants the political parties to conscientiously maintain accounts of donations, get them audited and submit the same to it on an annual basis. Such huge anonymous donations need to be banned temporarily under Section 29C of the Representation of the People Act, 1951.

Parties have hundreds of crores in their funds and all donations, including small sums. A revenue source asked why shouldn’t they have systems in place to record every penny which they are getting?

The government had declared last week that political parties depositing demonetised notes of Rs 500 and Rs 1,000 in their accounts be exempted from income tax if the money was collected in individual donations of less than Rs 20,000 per individual.

Clarifying, Revenue Secretary Hasmukh Adhia said, “Reports on the privilege extended to the parties are misleading. They haven’t been granted any exemption or privilege, post demonetisation and introduction of Taxation Amendment Act, 2016.”

“If there is any discrepancy, the parties would be liable to be questioned by Income Tax authorities as is anyone else,” Adhia added.

The EC proposed that I-T exemption be given to those parties that contest polls and win seats in Lok Sabha or assembly polls.