To check donations in cash to parties, EC seeks Rs 20 crore cap

The Commission has also called for an amendment to Rule 86 under Conduct of Election Rules to make it mandatory for candidates to meet all election expenses in excess of Rs 2,000 through cheque or electronic bank transfer.

Written by Ritika Chopra | New Delhi | Published:March 26, 2017 5:24 am
election commission, income tax laws, rp act, it act, cash donations to political parties, india news, latest news The EC, in its letter to the government, has now suggested that Section 13A of the IT Act, on income tax exemption in voluntary donations, be amended to extend exemption in case of all donations received by cheque and e-transfer.(File Photo)

The Election Commission (EC) has sought changes in the election and income tax laws to restrict cash donations to a political party to Rs 20 crore or 20 per cent of its total contribution, whichever is less. The Sunday Express has learnt that in a letter written to the Law Ministry about two weeks ago, the Commission proposed amendments to Section 13A of the IT Act and Section 29B of the Representation of the People (RP) Act to promote cashless funding of parties.

The government had recently accepted the EC’s long pending suggestion to lower the cap on anonymous cash donations to political parties to Rs 2,000 from Rs 20,000 per person. However, this move towards ushering in transparency in political funding was tagged ineffective by activists and experts who felt that parties would now resort to multiple receipts of Rs 1,999 each, like they did to evade disclosure under the old limit of Rs 20,000 on cash donations by issuing multiple receipts of Rs 19,999 each. The poll panel’s recent recommendation to the Law Ministry, aimed at promoting cashless funding, is significant in the backdrop of this criticism.

If accepted by the government, it would mean that total contribution from unknown sources to a political party would be limited to 20 crore or 20 per cent of the party’s total donation, whichever is less. The amendment would affect parties such as the BSP, 100 per cent of whose funding is from undisclosed donors. BSP has never disclosed details of any of its financial supporters on the ground that it hasn’t ever received any donation above Rs 20,000.

A study by the Association of Democratic reforms of the contribution statements by parties from 2004-05 to 2014-15 found that nearly 69 per cent of the total income of national and regional parties comes from undisclosed sources. The Congress was the highest funded party in this period with over Rs 3,982 crore. Of this, the study attributed 83 per cent to unknown sources. The BJP was a close second with over Rs 3,272 crore (65 per cent unknown sources) and the CPM a distant third at just under Rs 893 crore (53 per cent unknown sources).

The EC, in its letter to the government, has now suggested that Section 13A of the IT Act, on income tax exemption in voluntary donations, be amended to extend exemption in case of all donations received by cheque and e-transfer.

Further, for cash contribution, the EC wants income tax exemption to be restricted to Rs 20 crore or 20 per cent of the total contributions received by the political party, whichever is less. To compliment this change, the EC has also asked Law Ministry to add a new proviso under section 29B of the RP Act to provide that a party shall not receive contributions in cash beyond 20 crore or 20 per cent of the total contribution, whichever is less. The proposal is similar to the Law Commission’s suggestion made in its 255th report in 2015.

The poll panel hasn’t recommended 100 per cent cashless funding since cadre-based political parties such as the CPI and CPM depend on cash donations of small amounts.

The Commission has also called for an amendment to Rule 86 under Conduct of Election Rules to make it mandatory for candidates to meet all election expenses in excess of Rs 2,000 through cheque or electronic bank transfer.

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  1. T
    Tushar
    Mar 26, 2017 at 5:24 am
    All party would oppose it even though they preach a lot about clean money . The expenses they have to bear for all sought of activities wouldn't limit in billions
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    1. D
      Dr.Damodar Biswal
      Mar 26, 2017 at 4:53 am
      Make election spending more transparent.Right suggestion at the right time.But will our lawmakers agree?
      Reply
      1. S
        Shinde. S
        Mar 26, 2017 at 7:02 am
        Should be implamented immediately. Also reserve. more than fifty percent Mp ,MLA seats to economical weaker candidates
        Reply
        1. H
          harun
          Mar 26, 2017 at 5:17 am
          As much as Mayavati is ,all sides are guilty of paying lip service to clean funding.lt;br/gt;lt;br/gt;Its the PM who has been motivating the Aam Aadmi to use PayTM for tea,to first come out with the way the money spent in the UP elections was accounted
          Reply
          1. H
            harun
            Mar 26, 2017 at 4:02 am
            If at all there is truth in what is being promised by PM.lt;br/gt;lt;br/gt;He should accept the recommendation of the EC that max of 20cr should be in cash for parties and rest in cheques.lt;br/gt;lt;br/gt;That apart that any expenses in election above 2000 should be digital.lt;br/gt;lt;br/gt;As it is we see the Govt Ads on TV asking us to use PayTM to pay for Milk and Tea.lt;br/gt;lt;br/gt;67000 Volunteers on campaign for 45 days in UP was reported All expenses including Boarding ,Lodging,Chopper rides and Vehicles rent would have cost a Princely 150 crore,how was this Money accounted.lt;br/gt;lt;br/gt;If you have 500 /day for food and stay for a volunteer it will cost 150 crore.lt;br/gt;lt;br/gt;All these pretension of clean cash and clean economy is a hog wash,meant for Aam Aadmi .
            Reply
            1. J
              jew
              Mar 26, 2017 at 7:07 am
              There is going to be a big secondary market for electoral bonds. Companies with legit money would buy and sell it to guys with illegal cash. Who in turn will use it to donate to political parties. lt;br/gt;These bonds also make quid pro quo payments by cronies undetectable.
              Reply
              1. J
                jew
                Mar 26, 2017 at 7:11 am
                Why should small donors be scared to reveal their names? ?lt;br/gt;This is bulls@#t propogated by parties.
                Reply
                1. S
                  S Subramaniam
                  Mar 26, 2017 at 5:28 am
                  All cash donors should intimate their Aadhar number.
                  Reply
                  1. S
                    S Subramaniam
                    Mar 26, 2017 at 5:50 am
                    By not making Aadhar number mandatory for donors only defeats transparency.
                    Reply
                    1. R
                      Ronny Singh
                      Mar 26, 2017 at 6:38 am
                      Interestingly, so many NGOs lack funds and these parties get so heavy donations. Why not also check who is giving such donations and whether they also have some incentive to give them. Cash distributed in slums and village areas to gain votes is obviously infamous.
                      Reply
                      1. T
                        Tejas
                        Mar 26, 2017 at 4:45 am
                        I thought the new Finance Bill open a clear backdoor for companies to donate unlimited electoral bonds anonymously. lt;br/gt;lt;br/gt;This was added in the 40 amendments of the bill. Which such provisions the companies don't have to show to which party they donated and how much in yearly statements.lt;br/gt;lt;br/gt;Thus WHITE IS THE NEW BLACK, is all I can say!
                        Reply
                        1. T
                          Tejas
                          Mar 26, 2017 at 5:39 am
                          Jaitley said that was not feasible to link aadhaar to cash donations. Google it you'll find it.
                          Reply
                          1. S
                            Suneet Sood
                            Mar 26, 2017 at 4:00 am
                            The only persons who would make anonymous donations would be those parting with black money. Logically, anonymous donations should be capped at 0.00%.
                            Reply
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                              ASHOK
                              Mar 26, 2017 at 7:12 am
                              LOL
                              Reply
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