New EC rule: Parties will now have to deposit funds in banks

A set of new guidelines of the Election Commission came into effect today, making it virtually mandatory for political parties to deposit their funds in banks and not to exceed ceiling limits in financial assistance for candidates.
Under the guidelines, the treasurer of a political party is now required to ensure maintenance of accounts at all state and lower levels and consolidated accounts at the central party headquarters.
The accounts maintained by the treasurer shall conform to the guidance note on accounting and auditing of political parties issued by the Institute of Chartered Accountants. The annual accounts shall be audited and certified by certified chartered accountants as required under the Income Tax Act.

Under the guidelines, a party should ensure that no payment in excess of Rs 20,000 is made to any person or company in cash, except in a village or in town not served by a bank.
Also it will not apply to payments made to any employee or party functionary towards salary, pension or reimbursement of expenses or where cash payment is required under any statute.
The Election Commission order, which came into force today, was issued on August 29 under Article 324 of the Constitution (superintendence, direction and control of elections) as part of a set of comprehensive guidelines on transparency and accountability in party funds and election expenditure.