Political party , Person , Taxation , Companies act & Representation of People Act & Electoral trust
See what happened when Political party , person , taxation , companies act & Representation of People Act got at one place
Political party : if u want to help public at large Please, make funding to our political party.
Person : if I want to help public at large why should I make donation to political party rather than making donation to needy once .
Political party : but in our help to public “ it’s specific help to the person , who help us from public at large “ & that’s the difference.
Person : ok that’s better idea why should I even missed my self , I am also needy one. But what is the benefit to me , I can not claim deduction of such donation as of 80G?
Taxation : ok , don’t worry I am making easier to you .
I m inserting section 80GGB – which will provide deduction in respect of contribution given by Indian company to any political party registered u/s 29A of the representation of the people act , 1951
& 80GGC - deduction in respect of contribution given by any other person than Indian company except local authority & artificial person funded by government to any political party registered u/s 29A of the representation of the people act , 1951
Political party: there should be some benefit to us also !!!
Taxation : ok , let me see what can I do for you ?
As you are going to work for public at large by utilising such donation then I m going to give exemption u/s 13A to whole contribution received by you from such donations …. But hey hey …. Wait .. wait …. Subject to following three conditions :
a. maintain books of accounts
b. maintain detailed records for contribution exceeding rs. 20,000
c. Audit of Accounts
& CEO of political party , if total income before giving effect of section 13A exceeds maximum amount which is not chargeable to tax , furnish a return for A.Y.
Companies act : But I will put some restriction over such political contribution so as to secure share holder’s fund & to stop informal tie ups between political party & corporate through following ,
u/s 239 A company,
- which is not a government company or a company which has been in existence for less than three financial years, can make political contributions
- not exceeding 5 per cent of its average net profit of the three immediately preceding financial years (computed in accordance with the provisions of Sections 349 and 350 of the Companies Act) directly or indirectly to political party it self or to any person for political purpose.
- if a resolution, authorising such contribution, is passed at a meeting of the board of directors.
- & such political contribution has to be separately disclosed on the phase of financial statement giving the full discloser in that regard in notes also.
Representation of People Act : I also want to provide something
u/s section 29B of mine , preparation of a report by political parties, giving the particulars mentioned in the section in the prescribed form, which is to be submitted to the Election Commission by the parties.
Such a report is to be audited by auditors and approved by the C&AG once in a financial year, to determine the expenditure on constituency campaigns and on general party campaigns incurred by parties. Such reports are also to be forwarded to the Central Government, which shall present the same to both Houses of Parliament.
Some how Government also reached at the same place where all above are talking
Government : The high cost of operation in political functions calls for more established source of funds for the political parties. Directly funding of political party did not provide an option to future rewarding of more performing parties.
Even though existence of all above legal provisions under various acts , due to illegal & under table donations the basic purpose of insertion of such sections is not fully achieved. So we are going to insert electoral trust as an entity to which the funds are donated and the said trust at its discretion decides to fund the parties.
Taxation : Being a major revenue department of Government , i m going to help government in that Nobel cause.
So I am inserting section 2(22AAA) through budget 2009-10 for introduction of “Electoral trust” -
Electoral trust means
- Trust approved by CBDT
- & trust formed under the scheme as decided by central government.
Electoral trust : what is going to be our part ???
Taxation : Don’t worry .. as a Electoral trust you are going to receive funds from person & going to make donation to political parties. You are going to act mere as mediator.
As you are going to act trust I am going to make benefited you through insertion of section 13B, apply 95% of the donations
- distribute to any political party registered u/s 29A of the representation of the people act, 1951
- accordance with the rules frame by central government
& get 100% exemption form income tax .
Person : what is beneficial here for me !! , I have to make donation now to electoral trust & not directly to political party.
Taxation : the benefit available to you u/s 80 GGB & 80 GGC will be continued here.
After the whole talk …. Political party , person & Electoral trust gone to CA for asking is that new kid is going to be “ PAA of all political contributions” in future ….
CA : why are you worrying so much … insertion of new sections also comes with new way outs & I am here for that to find it out.
Electoral trust is to be framed under scheme as decided by central government , but yet no scheme yet has been decided & following Questions are yet pending ….
- The bodies which can setup such trust
- Max. amount that could be collected from single person in aggregate during the previous year.
- Max. amount that can be given to each political party in aggregate during the previous year.
So, good news to political party ….be relaxed , that kid is going to be in world of Indian constitution only after such scheme is decided by central government
Here good news is there for electoral trust.… as under section 13B there is no burden of 3 conditions as of section 13A of income tax act. & further no provision is mentioned for filing of return
But such happy provisions could be withdrawal by income tax in future at any time.
Good news for companies section 293A does not mention any thing about contribution to any electoral trust.
But words indirectly contribution will be confusing …. Is it going to cover contribution to electoral trust , in that regard companies act or government has to specifically mention.
I would yet say, for electoral trusts “Delhi is far... very far yet …”
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