The Election Commission of India is trying to cope with the enormous donations claimed to have been received by political parties, where no receipts are given and no details about donors are recorded.
According to a report in The Times of India on October 22, 2013, contributions worth almost Rs5,000 crore were received by six large parties — the Congress, Bharatiya Janata Party, Nationalist Congress Party, Communist Party of India (Marxist), Communist Party of India (CPI) and Bahujan Samaj Party — between 2004-05 and 2011-12. Of this, over Rs 3,600 crore, or more than 75%, came from unknown donors, according to the Association of Democratic Reforms. The Congress alone accounted for Rs 1,951 crore, or over 80% collected from undisclosed sources.
The Election Commission had sought the views of parties on 10 guidelines it proposed to bring transparency in political funding and set a September 30 deadline for responses.
When barely three parties responded, it extended the deadline by a fortnight. By October 15, only two — the Congress and CPI — of the six national parties and four — AIADMK, Trinamool Congress, the Zoram Nationalist Party of Mizoram and the Sikkim Democratic Front — of the 49 regional parties responded. Except Congress, the others agreed with the Election Commission proposal.
One of the Election Commission's suggestions is that parties receiving donations should give receipts for every donation or contribution received. This is to clamp down on the movement of unaccounted cash, especially during electioneering.
On October 15, Congress treasurer Motilal Vora wrote to the Election Commission, opposing a directive that makes it mandatory to issue an acknowledgement to every contributor. "It is neither practical nor possible" to issue such receipts to individuals making donations, he wrote.
A Matter of Record
The law relating to receipt of donations is contained in section 13A of the Income-Tax Act, 1961, which mandates that exemption from income tax will be given only if such political parties keep and maintain books of account and other documents, duly audited by a chartered accountant, as it will enable the income-tax department's officers to work out its total income.
It also gives exemption if a record of the name and address(es) of each voluntary contribution in excess ofRs20,000 is maintained with names and addresses of the contributors. Thus, the Act has adequate provisions about the maintenance of audited accounts, recording of contributions above Rs20,000 and details about donors. But the provisions are not implemented. Political parties seldom file income-tax returns in time or do not file at all. No instructions from the Election Commission or guidelines for this are necessary.
The solution that acknowledgement for donations up to Rs20,000 should be issued to every contributor is impractical and even if tried, is unlikely to solve the problem: fake names and addresses can easily be given, increasing work for the political parties, without any purpose. This problem has been recognised by the Act in sections 40A(3), 269SS and 269T, where payments up to Rs20,000 in cash have been permitted. There is no purpose in prescribing something that is not implementable.
Some control can be exercised by following the procedure concerning the accounting of contributions or donations up to Rs20,000 in each case in cash on the following lines if a day-to-day record of cash receipts is recorded in the cash book. A certificate should be recorded in a separate register serially numbered by the cashier so that a donation credited in the cash book represents cash donations not exceeding Rs20,000.
A separate bank account should be opened for such cash collections and each day's receipt deposited the next day in this account. A quarterly return concerning details of such receipts received during a quarter and their deposit in the designated account should be filed by political parties with the income-tax department within a week of the end of the quarter. Default should be penalised by monetary fines and prosecution. The success of this will depend on the activities of the taxmen. The Commissioners of Income Tax who have jurisdiction over parties should conduct a survey at the offices of such parties on a random basis every month to verify cash receipts.
These measures can reduce fake cash contributions not exceeding Rs 20,000 from each contributor, claimed to have been received year after year. The income-tax department needs to play an active part in checking such practices — not the Election Commission.
