The Narendra Modi government has exempted political parties and said that the banned old Rs 500 and Rs 1000 currency notes, that they deposit, in their accounts, will get full exemption from income tax.
Even as Centre cracks down against black money generators and hoarders in the country, with numerous seizures and arrests being reported daily and a new Income Declaration Scheme being announced today for them to come clean, the Narendra Modi government has exempted political parties and said that all political parties that deposit the banned old Rs 500 and Rs 1000 currency notes in their accounts will get full exemption from income tax. Revenue Secretary Hasmukh Adhia said deposits in bank accounts of political parties will not be taxed.
However, tax exemption on deposits by political parties subject to individual donations will not exceed Rs 20,000 in cash and will be done with proper receipt.
The government had even ruled that the farmers, exempted from paying tax on agriculture income need to make self-declaration showing their earnings to be less than Rs 2.5 lakh per year to deposit money in the banks without a PAN card. Stating that political party’s deposit will not be taxed, the Revenue Secretary Hasmukh Adhia also stated that farmers without self-declaration of income will mandatorily have to provide PAN cards for depositing money.
“If it is a deposit in the account of a political party, they are exempt. But if it is deposited in individual’s account then that information will come into our radar. If the individual is putting money in his own account, then we will get information,” Hasmukh Adhia told reporters.
Section 13A of the Income Tax Act, 1961 grants exemption from tax to political parties in respect of their income. This income could be from house property, other sources, capital gains and income by way of voluntary contributions received from any person.
These categories of income qualify for exemption without any monetary or other limit and the income so exempted is would not even be included in the total income of the political party for the purpose of assessment.
However, the tax exemption is applicable only if the political party keeps and maintain such books and other documents of the income and the accounts are audited by a Chartered Accountant.
Asked if PAN will be mandatory for deposits made by agriculturalist, he said: “A farmer has to give self declaration in Form 60 where he has to declare that his income is less than Rs 2.5 lakh. If he files Form 60, then PAN is not required. Those who are not able to give declaration, they have to give PAN.”
Adhia said the tax authorities will not unnecessarily chase deposits of less than Rs 2.5 lakh.
“We will not go unnecessarily after those with Rs 2.5 lakh deposits. But where we find people have tried to misuse the provision by putting in multiple accounts in different banks (we will go after them),” he said.
Adhia said that within one/two month’s time banks will accumulate PAN numbers of all existing account holders except for Jan Dhan/BSBD account. After the shock demonetisation announcement on November 8, the government allowed junked Rs 500 and Rs 1000 notes to be deposited in bank accounts.
For individuals and companies holding unaccounted cash, it has offered new tax evasion amnesty scheme wherein 50 per cent tax will be charged on declarations and quarter of the total sum be parked in a non-interest bearing deposit for four years.
(With inputs from PTI)