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Poll panel lists 200 parties that exist mostly on paper, will send it to Income Tax for action

Election Commission suspects many of these dormant parties being used for money laundering, need scrutiny.

Written by Maneesh Chhibber | New Delhi |
Updated: December 21, 2016 3:58:09 pm
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The Election Commission of India (EC) will soon write to the Central Board of Direct Taxes (CBDT) informing it about its decision to delist 200-odd political parties. A list containing details of the delisted parties will also form part of the communique that the EC will send to the CBDT in “the next few days” for action.

These political parties, many of which, EC officials suspect, could be nothing but money-laundering operations, are parties which have not contested any election since 2005 and exist mostly on paper.

Read | Poll panel lists 200 parties that exist mostly on paper, will send it to Income Tax for action

“This is just the beginning. We expect to weed out all non-serious parties. There are many that don’t even bother to file Income Tax returns or, if they do, they never send a copy to us,” said a source.

WATCH VIDEO | Election Commission Likely To Delist 200-Odd Political Parties: Find Out More

The idea behind sending a communication, sources told The Indian Express, is that the country’s election regulator hopes that CBDT will look into the financial affairs of these political parties since they are no longer entitled to any tax benefit that accrues to registered political parties.

Sources said the EC hopes the CBDT will have a “close look” at the financials of these delisted parties so that a clear message can go out that forming a political party for “turning black money into white” is no longer a good idea.

Source said that after having waited years for successive governments to act on its proposal to make changes to relevant laws to ensure that there is adequate transparency in the manner in which funds flow to political parties and are spent by them, the EC sometime back decided to resort to its inherent powers under Article 324 of the Constitution, which empowers it to “control the conduct of all elections.”
It’s under this that it has decided to delist the 200-odd political parties.

EC data shows there are currently seven National Political Parties, 58 State Parties and a whopping 1786 Registered Unrecognised Parties.

Under existing laws, the EC has the authority to register a political party but there is no provision to allow it to deregister any party that has been given recognition.

The EC has written to many governments in the past, seeking the power to deregister “non-serious” political parties, but nothing has been done.

On the issue of funding, in 2004, the then Chief Election Commissioner (CE) T S Krishna Murthy had written to then Prime Minister, recommending that political parties should be asked by law to keep details of all donors even if the amount of donation is below Rs 20,000.

Under existing law, parties are expected to file their income-tax returns containing details of donors who have made contributions above Rs 20,000. A copy of this report has to be sent to the EC every year.

However, most political parties declare most of their funds as having come from unnamed donors who donated less than Rs 20,000 each, thereby getting away without having to name the source of their donations.

Last week, Revenue Secretary Hasmukh Adhia’s announcement that political parties depositing now-scrapped old Rs 500 and Rs 1,000 notes in their accounts will be exempt from income tax provided the donations taken are below Rs 20,000 per person led to an outcry. The next day, the government, including Finance Minister Arun Jaitley, clarified that Adhia had only stated the existing provisions of law and the NDA government had not tinkered with the law.

But there was no explanation on why the NDA government, despite being in office for over two and a half years, hadn’t acted on the EC recommendation — supported by the Law Commission of India — to change the law to make it mandatory for political parties to also disclose contributions less than Rs 20,000.

In fact, the Narendra Modi government amended the Foreign Contributions (Regulation) Act, 1976, to allow political parties to accept donations from foreign entities, including companies with foreign share-holding.

”Since neither the previous government nor the present one acted on our recommendations about changing relevant provisions of the law to make donations to political parties more transparent, the EC acted on its own, using its inherent powers. We are sending the names of the delisted political parties to the CBDT. It is for them to act now,” said an EC source.

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