New Delhi: Union Finance Minister Arun Jaitley today said political parties haven’t been granted any exemptions after demonetisation and the introduction of the Taxation Laws (Second Amendment) Act, 2016, which came in force on December 15, 2016.
“Under Section 13A of IT Act 1961, Political parties have to submit audited accounts, income and expenditure details and balance sheets. Post demonetisation, no political party can accept donations in 500 and 1000 rupee notes since they were rendered illegal tenders. Any party doing so would be in violation of law.,” Jaitley said in a statement.
“Just like anyone else, political parties can also deposit their cash held in the old currency in banks till the 30th of December provided they can satisfactorily explain the source of income and their books of accounts reflect the entries prior to 8 November, he explained.
“If there is any discrepancy in the books or records of political parties, they are as liable to be questioned by the Income Tax authorities as is anyone else. They enjoy no immunity whatsoever.”
The Finance Minister also had a message for the media.
“I implore all journalist friends to be fully outraged against any step of the Government, if it is not against corruption. But in equal measure, I would also implore them to do adequate research before jumping the gun,” Jaitley explained.
He said income of, and donations made to political parties fall in the purview of Section 13A of the Income Tax Act 1961, and there’s no change in its provisions.
“In this era of instant outrage, a 35-year-old law is presented as a new law being passed by the NDA Government,” he said.
Jaitley also asked other political parties to follow PM Narendra Modi’s lead and ask their MPs and MLAs to submit bank account details from the period that followed the note ban.
“There is no question of sparing anyone, and the political class is no exception. In fact, PM Modi is setting a new example of propriety in public life, by asking all MPs & MLAs of BJP to submit their bank account details post demonetisation. We would like to urge the other parties to do the same and prove their intentions against corruption.”
Jaitley’s statement came on a day when the Central Board of Direct Taxes offered clarifications on reports that it can’t scrutinise tax returns of political parties.
There are enough provisions in the Income Tax Act to scrutinise the accounts of the political parties+ and these political parties are also subject to other provisions of Income -tax including filing of return,” the CBDT said.
The exemption from Income-tax is given to only registered political parties subject to certain conditions , which are mentioned in Section 13A of I-T Act, which includes keeping and maintaining books of accounts and other documents as would enable the Assessing Officer to deduce its income therefrom.
“In respect of each voluntary contribution in excess of Rs 20,000, the political party will have to maintain a record of such contributions+ along with the name and address of such person who has made such contribution,” the CBDT explained.
Further, the accounts of each political party are to be audited by a Chartered Accountant. Besides, political parties have to submit a report to the Election Commission about the donations received within the time frame prescribed.