New Delhi: The Election Commission has 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.
The Commission`s recommendation has come in the wake of a number of instances when registered parties have been found to misuse provisions of tax laws.
Fraudulent parties are being floated to launder money which finds its way into stock market and buy jewellery but has little to do with electoral purposes, it feels.
"The number of political parties registered with the Commission is almost touching the 1200-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 SY Quraishi told a news agency.
A random check by the EC revealed that office of one such party was in a tea shop while another spent Rs two to Rs three crore on jewellery and shares and a third party`s office was non-existent, he said.
Observing that almost 75 to 80 percent of these parties have not participated in any elections for the last several years, the CEC said though the Commission has power to register political parties, it does not have the same for deregistering them.
Therefore the EC also wants the power to deregister political parties if they fail to participate in elections.
The EC has already recommended to the government that the law regulating registration of parties should be amended authorising it not only to deregister them on sufficient grounds but also to regulate them so that they practice democracy in their internal functioning, he said.
Quraishi said that the Commission is also of the view that tax exemption should be given only to those parties which participate in elections and show their political existence by their poll performance.
In order to bring transparency in the accounts of political parties, he said that the EC has recommended that all parties should get their accounts audited annually by a panel of auditors appointed by CAG or EC.
The parties should also publish their annual accounts especially for the reason that donations to political parties enjoy income tax exemptions, he added.
"In my view, the failure to do so should invite nothing less than deregistration," Quraishi said.
Noting that many parties were not even auditing their accounts and not submitting their annual returns with the I-T department, he said that the EC asked for a report from Central Board of Direct Taxes (CBDT) about defaulting parties.
PTI
