On Friday, the Centre said political parties could deposit old Demonetised Rs. 500 and Rs. 1000 notes in their accounts without tax. Though this comes with a clause that deposits should be below Rs. 20,000 per individual with proper documents.
Revenue Secretary Hasmuk Adhia, said that the government is fiddling with the tax exemptions available for the Political parties, and the cash deposits are subject to condition. All the amounts above Rs. 20,000 must be deposited in the bank through cheque or bank drafts.
This option was available to farmers till date, now political parties have been added to the list. Farmers were exempted from paying tax on agriculture income, by giving a self-declaration that their earnings are limited to Rs. 2.5 lakhs per annum and can make bank deposits without a PAN card. For the money deposits higher than the amount of Rs. 2.5 lakh a PAN card will be mandatory.
Hasmukh told the reporters,”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.”
Section 13 A of the Income Tax Act, 1961 grants exemption from taxes 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. However, the tax exemption is applicable only if the political party keeps and maintains record books and all documents of the income. Also, these have to be audited by a chartered accountant.
Speaking about PAN requirement for farmers, he said: “A farmer has to give a self declaration in Form 60 where he has to declare that his income is less than Rs 2.5 lakhs. If he files Form 60, then PAN is not required. Those who are not able to give a declaration, they have to give PAN.”
After Demonetisation on November 8, the government has made many changes in the exchange and deposit of old notes. Any amount below Rs. 2.5 lakhs deposited in the account of women and farmers has been exempted from tax. Now Political parties are included in this list with a clause.
