Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Politics / Donations to political parties now tax-free
BackBack

Donations to political parties now tax-free

Donations to political parties now tax-free

Premium

New Delhi: Political parties could now receive more donations, with finance minister Pranab Mukherjee announcing a 100% tax deduction on companies and individuals contributing to electoral trusts.

Electoral trusts are created as pass-through vehicles for routing donations to political parties, and are approved by the Central Board of Direct Taxes. Currently, 100% deduction is allowed only if donations are made directly to political parties.

“Political parties may hope to get more donations by the move. This will also bring transparency in donations," said Amitabh Singh, partner at audit and consulting firm Ernst and Young Pvt. Ltd.

In 2003, India enacted a new law that made private donations to political parties easier. This law allows contributions by private companies to political parties, with a maximum limit of 5% of their profits. It also makes it mandatory for contributions to be made by cheque, and requires that parties audit their annual accounts and maintain a list of donors who give in excess of Rs20,000 and submit this to the Election Commission.

So far, any indirect donation to political parties was taxable in the hands of the donor. “Currently, companies (donors) shy away from expressing affiliation to any particular political party by giving it direct donations," said Singh.

For political parties, voluntary contributions are fully exempt from tax. While the Bharatiya Janata Party has welcomed the move, the Communist Party of India (Marxist) said it will increase corruption.

teena.j@livemint.com

Santosh K. Joy contributed to this story.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Politics News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 07 Jul 2009, 12:30 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App