Tax anonymous donation to political party at 30% rate:Assocham

Anonymous donations to political parties should be taxed at a rate of 30 per cent, industry body Assocham said today while demanding that penalty be levied on these parties for not filing returns in time.
"There is a need to amend provision in the Income Tax Act to provide penalty in case a political party fails to file the return of income in time," Assocham said in its pre-budget memorandum submitted to Revenue Secretary Shaktikanta Das.
"Surprisingly, there is no penalty prescribed for not filing the return of income by a political party in time," the industry body said.
As per the facts in public domain, more than 75 per cent of donations received by political parties are falling in the category of voluntary contribution not in excess of Rs 20,000 with the result that there is no trail of the name and address of the person who has made such contribution, the chamber said.

"Accordingly there is a need to introduce a provision similar to the provision of Section 115BBC that each political party shall be required to pay tax at the rate of 30 per cent in respect of the anonymous donation received by it," it added.
Income of a political party under Section 13A is exempt subject to the condition that such political party keeps and maintains books of accounts and other documents as would enable the assessing officer to properly deduce it income.
"The law has to be fair and equitable to all. If exemption is being denied to a person for not furnishing the return in time there is no reason that similar provision is not introduced for political parties to deny exemption in respect of its income under Section 13A, in case it does not furnish the return of income in time," Assocham said.