Funds and Political Parties – Mrs Vikram ( A reader)
Funds form the fundamentals of any political party. This is completely true with every political party in the world. Political parties across the world receive funds from various sources. In India, political parties receive funds from voluntary contributions (individual), public funding, corporate funding, etc, these are popular funding sources. There are other unpopular yet attractive funding sources like the miscellaneous funding, rally funding, sale of coupons, etc.
Understanding political funding and the Laws thereof
Public or state funds may be provided by the government for the purpose of elections. Indirect funding is permissible in India and the list includes income tax exemption under Section 13A of the Income Tax Act, 1961.
Every corporate in India sets up a separate fund for political parties is common knowledge. 90% of political party funds came from big corporates in the year 2013-14. Section 182 of Companies Act, 2013 govern these aspects.
Attempts have been made to regulate the cash being received by the political parties in India. Parties are to disclose cash donations above INR 20,000.00 and from this year (budget 2017) the limit is reduced to INR 2,000. Parties are supposed to declare the donations they receive under Sec 29c of RPA. If they fail to declare, the party may not be eligible for tax relief under the Income Tax Act, 1961. (Source – https://blog.ipleaders.in/funding-of-political-parties)
Association of Democratic Reforms (ADR) Report
A recent report submitted by ADR (Association of Democratic Reforms) points out that, two-thirds of the funds received by political parties, both at national and regional level were unknown sources.
Questions in the mind of the common man
- A very naïve yet valid question, “When every paisa we earn is to be accounted, then how come political parties are never questioned and that too when they have received 2/3rd of their total funds from unaccounted sources”.
- Do corporates share the same ideology of the party that they are funding?
- We understand that political parties are exempted from paying income tax. This is under Section 13A of the Income Tax Act, 1961. But we also understand that they have to file their IT returns. Do they?
- Are not political parties supposed to maintain a book of accounts?
- Should not the fund inflow from known, unknown, accounted, unaccounted sources be made open to relvant stakeholders, if not the common man.
- When every business entity and individual citizens have a PAN card, why not political parties?
- Can political parties’ funds ever be made transparent?