In a massive move during the Budget presentation, Finance Minister Arun Jaitley announced a big reform in the system of political funding in India, where he reduced the maximum donation that a political party can receive in cash, and put the cap at Rs 2,000 from any one source. Jaitley had said, “Political parties will be entitled to receive donations by cheque or in the digital mode from their donors.” Earlier, the limit from once source was Rs 20,000. This decision will be a big push towards transparency in political funding. Jaitley reasoned this move, by talking about black money, and said, “Clean the country from the evils of corruption, black money and non-transparent political funding.”
Jaitley, during the budget presentation, said that the main focus of the tax proposals was to stimulate growth, provide relief of the middle class, housing, black money curbing, digitisation, simpler tax administration and a transparent political funding system. The Finance minister further said that there is a need of effort towards cleansing of the political funding system in India. He added that even the donors have often been reluctant while donating by cheque and other transparent means so that their identities and find themselves in adverse consequences. In order to deal with such a system, Jaitley proposed the following points in his speech:
1) In accordance with the suggestion made by the Election Commission, the maximum amount of cash donation that a political party can receive will be Rs 2000/- from one person.
2) Political parties will be entitled to receive donations by cheque or digital mode from their donors.
3) As an additional step, an amendment is being proposed to the Reserve Bank of India Act to enable the issuance of electoral bonds in accordance with a scheme that the Government of India would frame in this regard. Under this scheme, a donor could purchase bonds from authorised banks against cheque and digital payments only. They shall be redeemable only in the designated account of a registered political party. These bonds will be redeemable within the prescribed time limit from the issuance of the bond.
4) Every political party would have to file its return within the time prescribed in accordance with the provision of the Income-tax Act.