Parliamentary panel questions Rs 2,000 cap on political donations

It also questioned whether the anonymity of electoral bond donors will compromise transparency

Will the new electoral bond safeguard the privacy of donors and is the Rs 2,000 cap on individual cash donation to political parties realistic? a parliamentary panel has asked.

The parliamentary standing committee on law and personnel, examining the issue of electoral reforms, has sent a questionnaire to all national and state parties seeking their views on the two measures, among others.

The parties have been asked, "Whether the limit of Rs 2,000 is in tune with the market conditions keeping in view the current inflation in the country."

According to the existing provisions of the Income Tax (I-T) Act, parties registered with the Election Commission (EC) are exempted from paying income tax.

To discourage cash transactions and to bring transparency in the source of funding to political parties, the Finance Bill, 2017 proposed to amend the provisions of the I-T Act to stop individual cash donation above Rs 2,000.

The EC had been pushing for the Rs 2,000 cap for a long time.

A group of former Chief Election Commissioners had recently welcomed the move to put a cap on cash donation to parties but said the provisions should be made more stringent as parties could still find ways to bypass laws aimed at cleansing the electoral system of black money.

Under the existing provisions, there is no restriction on cash donation received by a political party. However, to avail tax exemption, the political parties are required to submit a report to the Commission furnishing details of contributions above Rs 20,000 from any person.

They had also pitched for making political donations totally "cashless" to usher in more transparency.

The second poser the parliamentary committee has made to the parties is on the electoral bond.

"Whether the electoral bonds proposed in the Finance Bill, 2017 to streamline political funding will safeguard anonymity and privacy of the donor?" it has asked.

The EC had in May told the same parliamentary panel that the introduction of the electoral bond by the government would compromise transparency in political funding and termed it as a "retrograde step".

"The amendment in Section 29C of the Representation of the People Act, 1951 making it no longer necessary to report details of donations received through electoral bonds is a retrograde step as transparency of political funding would be compromised as a result of the change," it had said.

The government has said electoral bonds are aimed at cleansing the system and invited suggestions from all political parties for making the process better.

"People have been wanting to pay (political parties) by cheques but there has been a fear that they could land in trouble as their identity would stand exposed.

"(Through the electoral bonds) we have addressed both the issues — ensuring clean donations and keeping [a] identity of the donor confidential," Finance Minister Arun Jaitley had said in the Rajya Sabha in March.