New Delhi: A country-wide probe conducted
by the Income Tax department has found that close to 300
registered political parties have never filed their tax
returns and the Election Commission has now asked the
department to issue notices to them.
The probe, conducted after the EC asked the Central
Board of Direct Taxes (CBDT) to ascertain the financial status
of these small parties for alleged violation of tax laws and
money laundering, has been submitted to the election panel.
A number of parties also do not possess permanent
account number (PAN), the bulky report, prepared by the
assessment wing of the CBDT, said.
The EC had sent a list of suspect political parties to
CBDT for probe early this year. It was alleged that people are
floating such political parties in large numbers to evade
taxes as donations to them are exempt from payment of income
The EC has asked the department to intensify the probe
and serve show-cause notices to these small parties under
relevant sections of I-T Act and ascertain the source and end
use of the funds they received.
The report has tracked the I-T returns of these small
parties in 13 states including Tamil Nadu, West Bengal and
those from the Northeast.
"The status of such small parties in the remaining
states will also be sent to the EC soon," a senior officer
involved in the exercise said.
While national and other major political parties file
their I-T returns regularly, small and lesser-known parties
are under the scanner, the officer said.
The I-T department, in its recent report, also probed
the donors to these parties who provided more than Rs 20,000.
"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 said earlier this year.
Quraishi had made a strong pitch for providing tax
benefits on donations to only those political parties which
prove their strength at the hustings as exemptions on such
funds have led to mushrooming of 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.