CBDT examining allegations of tax evasion by political parties

Revenue Department said it is examining reports on political parties provided by the Election Commission.

New Delhi: The Revenue Department on Tuesday said it is examining reports on political parties provided by the Election Commission and the Home Ministry for violation of tax laws and allegations of money laundering.

"We have received some reports on political parties from the Election Commission. The reports are under examination," Central Board of Direct Taxes (CBDT) Chairman Sudhir Chandra told reporters here.

Tax authorities, according to income tax sources, will also go into the details provided by the Home Ministry pertaining to money laundering by political parties, which are claiming tax exemption.
It has been alleged that people are floating political parties in large numbers to evade taxes as donations to such entities are exempt from payment of income tax.

"The number of political parties registered with the Commission is almost touching the 1,200 mark. A recent law that exempted donations to political parties from income tax, for both the payers and the payee, has caused a spurt in the formation of new political parties," Chief Election Commissioner S Y Quraishi had recently said.

He had also asked for a report from CBDT about such defaulting parties.
Besides looking at the details provide by the Election Commission, the officials said that the income tax authorities would be scrutinising their I-T returns and background of donors who provided more than Rs 20,000.

"All such reports are being examined with the help of proper law enforcement agencies. The department is one of the largest consumers of the suspicious and cash transaction reports generated by the Financial Intelligence Unit and the unit has been sending us a huge data," income tax sources said.

Quraishi had recently made a strong pitch for providing tax benefits on donations only to those political parties, which prove their strength at the hustings, as exemptions on such funds have led to the birth of several new parties.

Observing that almost 75 to 80 per cent of the registered political parties have not participated in any elections for the last several years, the CEC said that although the Commission has power to register political parties, it does not have the power to de-register them.