New Delhi: With Lok Sabha polls set to begin next month, at least 14 electoral trusts have been set up by various business houses, including by giants like Tatas, Reliance, Mahindras and Bajajs, for contributing funds to various political parties.
Being registered under a new framework that mandatorily requires `Electoral Trust` in the name, the concept has been introduced to bring in more transparency into political funding activities.
According to data available with the Corporate Affairs Ministry, at least 14 electoral trusts have been registered and the count is expected to rise further as many other corporates have initiated process to set up such entities before polls start for electing the 16th Lok Sabha.
Some of these trusts have decided to release funds to political parties after the elections, while some others are already believed to have made certain contributions.
The corporate houses that have set up electoral trusts under the new regulatory framework in recent months include Tatas, Reliance, Bajajs and Mahindras.
Bharatiya Socialist Republican Electoral Trust, Bajaj Electoral Trust and Jankalyan Electoral Trust, are among those already registered, according to latest data available with the Corporate Affairs Ministry.
Progressive Electoral Trust has been established by Tatas while Reliance group has set up People`s Electoral Trust. Mining major Anil Agarwal-led Vedanta group has registered the Janhit Electoral Trust.
Satya Electoral Trust has been formed by Bharti group while MP Birla group has incorporated the Paribartan Electoral Trust and KK Birla group has registered the Samaj Electoral Trust Association.
The remaining five are Mahindra Electoral Trust Company, Pratinidhi Electoral Trust, Reformative Electoral Trust of India, Gauri Welfare Association Electoral Trust and Harmony Electoral Trust.
Names of many of the trusts do not identify with the business or corporate with which they are associated. In some instances, the trusts and their respective corporate house share common address.
Although business houses have been funding political parties, the idea of electoral trust is aimed at streamlining the process as well as to usher in more transparency.
For political funding purposes, companies and other entities can register non-profit trusts which would help in differentiating them from other group firms with business interests.
The upcoming polls, that would be spread during the
period from April 7 to May 12, is being keenly watched not only for the contest between major political parties BJP and Congress but also for the presence of new entrant Aam Aadmi Party (AAP).
To facilitate the registration of electoral trusts, the Corporate Affairs Ministry has also amended its `Name Availability Guidelines`.
Electoral trusts are registered as non-profit ventures under Section 8 of the Companies Act.
Prior to this, these trusts could be set up under Section 25 of the Companies Act as per the tax department`s Electoral Trusts Scheme, 2013.
Corporates are entitled for tax benefits with regard to electoral trusts subject to certain conditions. The benefits can be availed only if the trusts distribute 95 per cent of the total contributions received in a particular fiscal to registered political parties in that same year itself.
As part of ensuring utmost transparency in the functioning of electoral trusts, these entities are barred from receiving donations in cash. Foreign citizens are not allowed to contribute money to the trusts.
Besides, while accepting contributions, the trusts are required to take Permanent Account Numbers of all resident Indian donors and passport numbers in case of non-resident Indians.
