A year after the Modi government announced capping of anonymous cash donations to political parties at Rs 2,000, it has emerged that the aim of the move — to ensure greater transparency in funding — cannot be fully realised as the Centre failed to amend an electoral law that the Election Commission had asked for.

While the government brought in an amendment to the Income Tax Act with Section 13A to say that political parties will have to declare all donations above Rs 2,000 to obtain tax exemption, it did not amend Section 29C of the Representation of People’s Act, 1951, to reflect the same, despite the EC flagging the issue to the law ministry twice last year. 

The EC is closely examining the concerns on electoral transparency that have now risen as a result — with political parties still filing reports of contribution of Rs 20,000 and more. This has resulted in a situation where while a political party will have to declare all donations it has received above Rs 2,000 to the Income Tax Department to avail of tax exemptions, it is not bound to declare the names of donors for the same to the EC in its contribution report, as the Representation of People’s Act still maintains the Rs 20,000 limit. This means that the public cannot access the names of entities who have donated more than Rs 2,000 to a political party, defeating the objective of the move initiated in 2017. The EC is also unable to do anything on the matter as rule books do not allow it.

The EC had first pointed out this anomaly to the government in 2017.

ET has learnt that the EC is now considering the matter afresh in light of the contribution reports filed, and will, in all likelihood, reiterate the need to amend the Representation of People’s Act so that the anonymous cash donation cap of Rs 2,000 is adhered to.

Both, Mayawati’s BSP and Sharad Pawar-led NCP have not declared or referred to any contribution below Rs 20,000 in the latest 2017-18 contribution reports filed with the EC, sources told ET. The BSP has gone on to declare it has not received any contribution above Rs 20,000 in 2017-18, skipping all mention of the new Rs 2,000 limit. The Communist Party of India is the only party so far to have sou moto declared donors of all amounts down to Rs 1,000. The Congress, the BJP and Trinamool Congressare yet to file contribution reports. The three parties that have declared funds have also not mentioned any funding received via electoral bonds.

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