Now tax exemption for political parties depositing old demonetised notes

The Revenue secretary Hasmukh Adhia stated in a prèss conference on 16.12.16 that political parties depositing old Rs500 and Rs1,000 notes in their accounts will be exempt from income tax provided the donations taken are below Rs20,000 per individual and properly documented.

Adhia said the government is not tinkering with the tax exemption available to political parties and they are free to deposit old Rs500 and Rs1,000 notes in their bank accounts. But these deposits will, however, be subject to the condition that individual donations taken in cash do not exceed Rs20,000 and are properly documented with full identity of the donor.

“If it is a deposit in the account of a political party, they are exempt. But if it is deposited in individual’s account then that information will come into our radar. If the individual is putting money in his own account, then we will get information,” he said.

They need to clarify that #DeMonetisation means it is #DeMonetisation for all. Same rules for everyone. If 500/1000 are illegal tender, then how are they trying to show that there is a division between common people & political parties?” Banerjee said in a series of tweets.

“Even the timing of these statements show that there may be an ulterior motive. Is there a motive? Are they trying to give a hidden message to cadre of one political party? Why these confusing and misleading statements now? They must clarify,” she said.

Section 13A of the Income Tax Act, 1961 grants exemption to political parties

Section 13A of the Income Tax Act, 1961 grants exemption from tax to political parties in respect of their income. This income could be from house property, other sources, capital gains and income by way of voluntary contributions received from any person. These categories of income qualify for exemption without any monetary or other limit and the income so exempted would not be included in the total income of the political party for the purpose of assessment.