Concerned over the huge flow of money into the five states which go to polls next year, the Election Commission (EC) has asked the income tax (I-T) department to submit reports on political parties that are receiving donations and enjoying tax exemptions without filing returns.
The I-T department has been asked to present the reports to the EC within two weeks of the announcement of elections, say sources. Five states ? Uttar Pradesh, Uttarakhand, Goa, Punjab and Manipur ? will go to polls early next year.
Political parties are required to maintain records of donors for amounts over R20,000. Donations are tax-exempt, provided parties disclose funding details and file returns. However, according to the revenue department data, out of 1,200 registered parties, around 800 do not file tax returns. While national and other major political parties file returns regularly, several smaller parties do not.
The current cap on campaign spending is set at R40 lakh per candidate for elections to Parliament and R16 lakh for state Assemblies. ?It came to the notice of the Commission that money is flowing hugely on the eve of the elections by political parties and candidates. All this expenditure needs to be accounted for,? an official said.
The EC has also asked the tax department to open control rooms, with 24X7 call centre facility, in the state capitals for receiving complaints or information on movement of cash or other items suspected to be used for bribing voters.
The EC has already issued guidelines for monitoring poll funding in these states. According to it, the district electoral officer would ask banks to submit daily reports on suspicious cash withdrawal of over R10,000 from the account of any individual during the election process. If suspicious withdrawal of a large amount of cash is noticed, necessary action may be taken and the information of above R10 lakh would be passed by the electoral officer to the I-T department.
The measures have been taken as the EC wants to curb the flow of black money into the political system. The lack of transparency in funding political parties and elections is said to be one key reason behind the unbridled corruption.
Earlier, the EC had written to the I-T department to make it mandatory for all donors to parties to submit their PAN and address proof for donations of R20,000 and above. Besides, such payments must be made only through account-payee cheques. The Commission is also likely to summon the chairman of central board of direct taxes (CBDT) for a response on the board?s alleged inaction in notifying a new accounting system for political parties. The EC wants CBDT to notify an accounting system for political parties as there is a fear that without proper books of accounts it would be difficult for the Commission to curb the flow of black money into electoral politics.