EC Wants Anonymous Donations to Political Parties Capped at Rs 1,999

New Delhi: Seeking to stem the flow of black money in polls, the Election Commission has urged the government to amend laws to ban anonymous contributions of Rs 2,000 and above made to political parties.

But, such declarations are mandated only for contributions above Rs 20,000.

As per the proposed amendment, sent by the Commission to the government, and made part of its compendium on proposed electoral reforms, "anonymous contributions above or equal to the amount of Rs two thousand should be prohibited."

Revenue Secretary Hasmukh Adhia said the government is not tinkering with the tax exemption available to political parties and they are free to deposit old 500 and 1,000 rupee notes in their bank accounts. But these deposits will, however, be subject to the condition that individual donations taken in cash do not exceed Rs 20,000 and are properly documented with full identity of the donor.

The Commission has also proposed that exemption of Income Tax should only be extended to political parties that contest elections and win seats in Lok Sabha or assembly polls.

Only income under the head 'salaries and income from business or profession' are chargeable to tax in the hands of political parties in India.

The Commission said, "There could be cases where political parties could be formed merely for availing of provisions of income tax exemption if the facility, that are at the expense of the public exchequer, is provided to all political parties."

In yet another recommendation to check black money, the EC has asked the Law Ministry to ensure that political parties are made to register details of donors for coupons of all amounts on the basis of a Supreme Court order of 1996.

Coupons are one of the ways devised by the political parties for collecting donations and hence are printed by the party itself. There is no cap or limit as to how many coupons can be printed or its total quantum.

Currently, the details of donors is not required for coupons with small amounts such as for Rs 10 or 20. "These smaller sums aggregate into a bigger amount and hence, they need to be accounted for, to ensure transparency," the Commission said.