These steps are part of a set of proposals made by the accounting standards regulator Institute of Chartered Accountants of India (ICAI) to the EC, in response to an initiative by the latter.
Sources said that one of the proposals that is being seriously considered is of ensuring that political parties maintain their fiscal year from April 1 to March 31, as is the practice with companies. The EC is also likely to ensure that like corporate houses, political parties also get their financial accounts audited within the first six months of the fiscal.
Political parties recognised by the commission as 'national parties' (six of them) and 'state parties' (47 at present) would need to put out audited yearly accounts in national and regional dailies, a source privy to the discussions in the EC told FE.
Besides, the copy of the audited accounts of political parties should be submitted to the EC.
Currently, political outfits are required to send the audited accounts only to the income tax department. The EC is also keen to bring under its aegis the long unresolved issue of political funding which it feels is the root cause of corruption in the electoral system. We are looking at the prospect of making it mandatory to make certain key disclosures, the source said. For instance, the donor's full identity, including his address and permanent account number (PAN) has to be submitted with the EC if his donation exceeds Rs 20,000. These payments must be made only through account payee cheques. With the proposed disclosures, the government will be able to track the source of political donations, the official added.
The move is aimed at curbing the flow of black money into the political system. Lack of transparency in funding political parties and elections is said to be the key reason behind the unbridled corruption in the country. There is a cap on the amount of money that can be spent by candidates in elections: Rs 40 lakh for those seeking election to Parliament and Rs 16 lakh for Assemblies. However, it is common knowledge that in most cases, the amounts are much higher with political parties refraining from filing tax returns.
Out of 1,200 registered parties in the country, around 800 do not file tax returns. The EC has also asked the I-T department to be vigilant on cash movement during polls, in an attempt to prevent parties from buying votes. Assembly elections in five states UP, Uttarakhand, Goa, Punjab and Manipur are due early next year. Lack of electoral reforms is seen as one of the reasons behind the use of money power in elections.
Speaking to FE, former finance minister and chairman of the parliamentary standing committee on finance Yashwant Sinha recently said that there cannot be any control over corruption in the country without massive electoral reforms.