Political parties should deposit funds in banks: EC
The Election Commission on Friday virtually made it mandatory for political parties to deposit their funds in banks and not to exceed ceiling limits in financial assistance for candidates to ensure transparency and accountability.
New Delhi: The Election Commission on Friday virtually made it mandatory for political parties to deposit their funds in banks and not to exceed ceiling limits in financial assistance for candidates to ensure transparency and accountability.
The Election Commission order in this regard under Article 324 of the Constitution (superintendence, direction and control of elections) was part a set of comprehensive guidelines on transparency and accountability in party funds and election expenditure.
Under the guidelines, the treasurer of a political party is now required to ensure maintenance of accounts at all state and lower levels and consolidated accounts at the central party headquarters.
The accounts maintained by the treasurer shall conform to the guidance note on accounting and auditing of political parties issued by the Institute of Charted Accountants. The annual accounts shall be audited and certified by the qualified by certified charted accountants as required under the Income Tax Act.
Under the guidelines, a party should ensure that no payment in excess of Rs 20,000 is made to any person or company in cash, except in a village or in town not served by a bank.
Also it will not apply to payments made to any employee or party functionary towards salary, pension or reimbursement of expenses or where cash payment is required under any statute.
The guidelines will come into effect from October one
Referring to the Representation of the People Act provision regarding ceiling for election expenditure of a candidate, the guidelines make it clear that such assistance from a political party shall not exceed the prescribed ceiling.
"Any payment in this regard by the party shall be made through crossed account payee cheque or draft or through bank account transfer and not in cash," says one of the guidelines.
While the recognised political parties shall file all reports, namely the contribution reports in Form 24A, the audited annual accounts as certified by the charted accountants and the election expenditure statements with the Commission.
The unrecognised parties shall file them with the chief electoral officer of the states.
The EC said in order to bring uniformity, all political parties shall submit to the Commission or to any authority mentioned by it a copy of the annual accounts with auditors report for each financial year before October 31 of each year.
The Income Tax provisions do not allow any deduction on
the contributions made in cash by any person or company to a political party.
Accordingly, the Commission guidelines say, the political party shall maintain names and address of all such individuals, companies or entities making donation to it excepting petty sums donated by public during rallies.
Further, any amount or donation received in cash, shall be duly accounted in the account books deposited in the party's bank account within a week of its receipt.
However, the party can retain a reasonable amount required for day to day functioning and for defraying cash expenses.
The Commission said concerns have been expressed in various quarters that money power was disturbing the level playing field and vitiating purity of elections.
Noting that it is desirable for political parties to observe transparency and accountability in respect of funds raised and expenditure incurred both during elections and in other times, the Commission said it is necessary and expedient to provide guidelines for bringing that.
The Commission said it sought suggestions and inputs from all recognised political parties, most of whom supported the issue of transparency guidelines. Some others had a different view.