Finance Minister : Tax Exemption For Political Parties On Depositing Old Rs 500, Rs 1000 notes
By F9 Team : 17-Dec-2016
Today, Finance Ministry has announced that it has decided to exempt from tax the deposits of money in old notes into banks by political parties. And that there will be no tax scrutiny made on the deposits of old Rs. 500 and Rs. 1000 notes into banks made by political parties till December 30.
The decision is made according to a decades old law of India that states that political parties are exempt from taxes for the income that is generated from a group of sources like donations received from volunteers.
According to the Section 13A of the Income Tax Act, 1961, all political parties in India are exempted from tax for the incomes that have been received from house property, other sources, capital gains, and also for the income earned through voluntary contributions received from the other persons.
Regarding the deposit of old notes into banks, Revenue Secretary, Hasmukh Adhia has told today that, “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.”
Adhia has also noted that, the political parties should maintain records of all the details who contributed funds of value more than ten thousand rupees voluntarily to the party such as name and addresses of the persons contributed, or else the income tax exemption with respect to contributions will not be applied.
It is reported that most of the political parties in India always try to evade tax by manipulating the lists of volunteer contributions by including the names of small volunteers and hiding the major contributors and thereby escaping the scrutiny from tax officials.