In a bid to “cleanse political funding landscape” in India, Chief Election Commissioner Rajiv Kumar is learnt to have written to Law Minister Kiren Rijiju seeking an amendment to the Representation of the People (RP) Act to bring down the ceiling of anonymous cash donations from the existing Rs 20,000 to Rs 2,000.
Additionally, the EC has also sought to limit cash donations to Rs 20 crore or 20 percent (whichever is lower) of the total donations received by a party, reports said. The Commission has also proposed that digital transactions or account payee cheque transfers should be made mandatory for all expenses above Rs 2,000 to a single entity or person.
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The Commission’s proposal to amend the Representation of People Act, 1951, is based on its inconsistency with the Income Tax Act on the threshold of anonymous cash donations.
The specific anomaly in the RPA lies with respect to Section 13A of the Income Tax Act, amended in 2017, which caps anonymous cash donations at Rs 2,000. The RPA, on the other hand, stipulates a declaration of cash donations only above Rs 20,000.
According to a report by the Association for Democratic Reforms, eight national political parties in India amassed Rs 15,000 crore between 2004 and 2021 in donations below Rs 20,000 from unknown contributors. Neither the Income Tax department nor the Election Commission have any knowledge of where these donations came from.
Another reform proposed by the EC concerns plugging foreign contributions in contravention of the FCRA, 2010. The ECI, in his letter to the Law minister, has also sought to put in place a mechanism to segregate foreign contributions to political parties at the initial stage itself.
The EC’s recommendations come in the backdrop of its ongoing crackdown against political parties for violation of RPA provisions. The EC recently delisted 284 non-existent but Registered Unrecognised Political Parties (RUPPs) and declared 253 others as inactive. The latest decision brings organisations under the scanner for alleged violations of election rules to 537.
On September 7 this year, the Income Tax department raided over 50 locations across states as part of its probe into alleged tax evasion by RUPPs . According to the department, RUPPs in Gujarat amassed donations worth over Rs 4,000 crore over the last three financial years.
The poll panel had said in May that 199 RUPPs availed IT exemptions to the tune of Rs 445 crore in 2018-19 while a similar exemption of Rs 609 crore was availed by 219 RUPPs in 2019-20.
