Sunday 15 January 2017

WHY EXEMPT POLITICAL PARTIES FROM TAXATION



Since the incorporation of Income tax Act, The political parties are exempt from paying Income tax. However they are required to file their Income tax returns to claim this benefit.  Income Tax Act grants exemption from tax to political parties for income from house property, income from other sources, income from Capital gains and income by way of voluntary contributions received by political parties from any person provided the political party keeps and maintains record in respect of voluntary donation received in excess of Rs 20,000 giving details of amount received, name and address of person who has made the contribution.  

With the above heads being exempted, only income from salaries and income from business or profession is left. The political parties were very smart while preparing and passing the law. Since they are neither in employment nor in business, hence only these two heads are kept out and rest is exempted. 

The common man works so hard for his income only to pay tax on same based on tax slabs.   The Current government should bring about overhauling changes in Section 13 by removing all exemptions in the upcoming budget in order to bring in more transparency among political parties. 

Also at the same time, for voluntary donations above Rs 20,000 should be brought down to Rs 5,000 or even nil similar to practice followed in other NGOs. With this every donation received will be fully accounted for and the unknown sources will not be present.  Going forward, the election commission should put up the income and expenditure account as well as balance sheet in its website for everyone to view. 

In media we see income tax raids in corporate, individuals but never for political parties organisation. Isn’t that surprising?  Time has come that the Income Tax department works with full autonomy and not with Government dik-tak. This hopefully will bring in better governance among political parties. Parties must understand, Swachh campaign should begin at home and not from outside.  Giving exemption to deposit old notes during demonetisation without being questioned is not a good sign.  They have to take people along in the mission of clean Bharat and hence come under the taxation network.