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PRESSINFORMATION BLREAlq?f ~ <bI<ll<:'lll

GOVERN\1£Yr OF INDlAmm~

The Sentinel, GuwahatiMonday, 9th May 2011, Page: 8

Width: 32.89 ems Height: 17.27 ems, Ref: pmin.2011-05-12.30.11

Role of Income TaxDepaftment in curbinguse of black:money in elections-I .

/;.I;} ?I. For-the first time in the guidelines did not. prescribe any III.·THE RELEVANT PRO· (iv) The treasurer ofsuch po- exemption from income tax in re- souvenir,' brochure and the like nies and any person respectively.

history of elections, the-Election criteria for 'selection of political VISIONS: litical party or 'any other person speer of specified categories of in- 'published liy a political party will (e) In order to bring transpar-Commission of India had geared' parties' .returns for in-depth as- (A) -INCOME TAX l\CT, authorized bythat political party come derived by political parties, not be allowed as a deduction in' .ency and reforming the system ofup the Income Tax departmeni to sessment. What made the CBDT 1961: submits a report of contributions namely, income from investments computing the taxable profits." funding of political parties in theprevent the use of ill-gotten mon- ·to issue such guidelines when even (a) Section·13A of the Income recei ved by it irrexcess of both in movable and immovable (b) Bythe sameTaxation Laws country, the Finance Act (No.2),ey in the recentheldAssemblyelec-: 'the provisions relating to filing of Tax Act, 1961 contains a special Rs.20,OOO/c in a financial year in properties and income by way Of (Amendment) Act, 1978, a new 200911as inserted a new Sectiontions. income Tax .officials had lncome Tax returns by politicalpar- provision relating to income of the prescribed form to the Election voluntary contributions. The pro- sub-section, sub-section (4B) was 13B in the lncoine Tax Act, 1961been posted at all the district head ties were not being religiously en- political' parties. Thissection pro- Commission under section 29C of posed exemption will be available also inserted in section B9 of the w.e.f. 01.04.2010. This sectionquarters of the states whereelec- forced by the department earlier? vides that the following incomes the Representation of the People only-in the case of political parties, Income-Tax Act, 1961 casting an. provides that any voluntary con-tionswere held. Income tax offi- Perhaps the reason lies in the scath- of a politicalparty shall not be in- Act, 1951.In caseoffailure to sub' which are registered or deemed to obligation on the chief executive tribution received by an electoralcials had also been posted at air- ing remarks made by the Honour- eluded in its total income for the mit the/report, no exemption U/ be registered with the Election officer (whether known as secre- trust shall be exempt from income'ports, and railway stations in or- . able Apex Court against the In- purpose of charging Income Tax: s:l3A-ofthe income Tax Act, 1961 Commission of India under the tary or by any other designation) tax'if:'-der to keep a watch on the move, CODleTax department in theirjudg- (i) Income from house prop-. shall be available to the political Election Symbols (Reservation of every political party to furnish a (a) Such electoral trust distrib-ment of suspicious money: The ment in the'case of Common Cause . erty (i.e, rental.income) party.for such financial year. and Allotment) Order, 1968. The 'return of income.of the political utes 'to any political party regis-.move had started ·yielding divi- VIs Union of India (i22 ITR 2(0). .(ii) Income from othersourc- For the purpdses of the above exemption will not be allowed un- . party if the total income of the par- tered under Section 29 of the Rep-dends and going by the .press re- The Apex Court observed t\lat~ es (i.e. interest income etc.) section,' a "Political party" has less the political party maintains ty without giving effect to the ex- . resentation of People Act, .1951ports a substantial amount of such "It is obvious that there has . (iii) Capital gains been defined-to. mean a political proper books of account; records emption U/s..13A, exceeded the 95% of the aggregate .donations.cash had already been seizedThis been a total in-action on the part of (iv) Any income by way of party registered under section 29A the name and.address of every per- maximum amount not chargeable· received by it during' that yearrncasure was. first' taken in Bihar the Government to enforce the pro- voluntary contributions. of the Representation .of the Peo- son who has made "a voluntary to tax. . alongwith any brought forward'Assembly elections and hence re- . visions of the Income Tax Act reo. The above exemption, howev- ple Act, 1951. Section 13A of the contribution of more than ten thou- (c) A riew sub-section (2B) surplus. andferred to as the "Bihar Model". lating to the filing of a return of er, is subject to the following con- . Income Tax Act,'1961 was origi- sand rupees at a time; and the.ac- was also inserted in Sec.37 of the . (b) Such electoral-trust func-The purpose was to 'see that elee-' income' by a political party. The ditionsi- .' nally introduced by the Taxation counts of the political party are au- Income Tax 'Act. 1961which pro- tions in accordance with the rules'tions were .not only peaceful but provisions of Sec. "l3A of the In- (i) Such political party keeps Laws (Amendment) Act., 1978 dited by a chartered accountant or vided that anyexpenditure incurred made by the Central Governmeht.also fair. . come Tax Act read' with Section 'and maintains such books of ac-' w.e.f 1-4;79. While moving the other qualified accountant. by an assessee on advertisement "Electoral Trust" has been de-. 11. A few years back, the 293A of the Companies Act clear- count and other documents as Taxation Laws (Amendment) Bill, Payments made for advertise- In .any souvenir, brochure, tract, fined to mean' a trust so approvedCentral Board of Direct Taxes \.yindicate the legislative' scheme .. would enable the Assessing effie- . 1978 in the Lok Sabha on 12-5- rnenrs in souvenirs, brochures and pamphlet or the' like published by by the Central Boardof DirectTax-(CB{)T) had issued instructions to the object of which is to .ensure er to properly deduce its income 1978, the then Fin-ance Minister the like published bypolitical par- a politicalpartyshall nOIbe allowed es in accordance with the.schemeall Chief Commissioners of In: . that there is transparency in the pro- therefrom; Shri H.M. Patel thus outlined the ties are not made on considerations in computing the income chargea- made in this regard by theCentralcome Tax that Income Tax returns cess of fund collecting and incur- .(ii) It keeps and maintains a objects behind introducing the said of commercial expediency, but are blc. under the head "profits and Government .. of all political parties should be ring expenditure by 'the political' record of.~ voluntary contribu- provision (Section 13A): in the nature of disguised dona- gams of business or profession, Consequential amendments'compulsorily.taken up for in-depth . parties. The requirement of main- non in excess of Rs.20,OOO/- and "Political parties areessential: tions made with the twin objective (d1The Election and other Re- have been made in Secti onsscrutiny. This compulsory scruti-: taining audited accounts by the the names and address of persons in any democratic set-up. The tax- of circumventing the ban on com- .lated Laws (Amendment) Act, 80G,GB 'and 80GGC to'.provideny applied to all pending returns political parties ismandatory and who' have made such contribu- arionof their income, however, rc- . panydonations U[1dfor securing ..2qo3'.inserted·[wO new sections for 100%deduction in the compu-of political parties as well as to re- has to be strictly enforced: It·was 'tions: and duces their disposable funds there' their deduction in the computation 8OGGtl~.8OGGC in the lncorne . tation of income of the donor toturns to be received iri future.These obligatory for the Income Tax au- (iii) The accounts of such po- .by adversely.affecting their capac- of-taxable profits. It is, therefore, . l)x Act, 1961.w.e.f. I 1'.09.2003. the "Electoral Trust", .instructions were issued revising thorities to have strictly enforced litical parties are audited by an ac-' ity to finance their activities from proposed to provide that ex~ndi::' ·'·1)!ese·sections provide for.deduc-the earlier guidelines for selection the statutory provisions of the In- count-ant asdefined in-See, 288(2) . legitimate sources of income.It is, ture incurred by a tax payer ·for.·. uon tn respect of contributtons giv- Ramesh Goenkaof cases for scrutiny. The earlier· come Tax Act." of the Income Tax Act, -J'9{i1. . therefore, proposed to provide for purposes of advertisement in any ...en topolitical parties by cornpa- . . Advocate

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