BIG Expose! Big Political Scam Unveiled on Political Funding! Read Here

The Election Commission of India (ECI) is the highest body to frame policies and rules regarding the conducting of elections. According the present rules, the political parties are barred from undertaking any commercial activity, which exempts them from paying taxes. However, they are still under the scanner of ITD.

Just yesterday, Reuters news agency created confusion by posting this tweet:

“Finance ministry official says political parties are exempted under income tax law to deposit old currency notes in their bank accounts”

Later, they made a clarification:

“Political parties can deposit old notes in banks only if they had taken donations in cash up to 20,000 rupees from individuals before Nov. 8”

So we’ve come up with important FAQs, that will help clear the matter.

Q1. Were political parties always exempted from paying income tax?

A- Yes, under Section 13-A of the IT Act, political parties are not required to pay Income Tax. But they are still required to file their Income Tax Returns (ITR).

Q2. So we can know the source of their income i.e. where their fundings are coming from?

A – Yes, but there is a loophole. Donations below 20,000 rupees do not need to be reported to ECI (Section 29C (3)) but they have to be reported in the ITR. Political parties are therefore, not required to disclose information of donating below Rs. 20,000.

This does not mean that parties are exempted from income tax; they still have to maintain books of accounts, file returns, and be open to raids, etc.

Q3.Can a Party convert black money to white?

Yes. Parties can take money and show them as donations below 20k rupees and try to convert it to white money for a ‘cut’ and only a strong political party can nail them down.

Q4. Do you think Narendra Modi will do it?

It looks like it. That’s the reason he asked all BJP MPs to submit their bank statements by 31st December.

Q5. So what should be the way forward?

A – More transparency is needed in the entire system. Fundings below Rs. 20K must have the same regulations as for donations above 20k i.e. name, full address, PAN number of donors must be recorded, and finally the ITR details should be made public.

And like always, mainstream media is hiding this news because they receive huge “donations” from political parties to cover their news in the time of elections. So this expose news needs to be shared as much as possible.