As the Narendra Modi-government was laying out the contours of new black money declaration scheme for tax cheats, a mammoth loophole came to light that could potentially prove the entire exercise futile — exempting deposits made by political parties from tax scrutiny and subsequent investigation.
The move is devoid of logic and rationale and raises a big question on the very intent of the Centre to unearth black money in the system at any cost. It is a known fact that political funding is the foundation of black money in any economy and it is that evil which feeds and nurtures all other forms of illegal cash within the system. Unless these are scrutinised, everything else the government does in the name of black money hunt will be pointless and there will be an element of suspicion.
The government move also shows how there is a clear double standard for the common man and political parties when it comes to black money hunt. The aam aadmi is supposed to bear it all, answer questions, face harassment even if his money is legitimate but politician enjoys a God-given immunity. According to Revenue Secretary Hasmukh Adhia: “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.”
The Section 13A of the Income Tax Act, 1961 is what gives immunity for political parties in respect of their income from house property, other sources, capital gains and income by way of voluntary contributions received from any person. Political parties will merrily use this opportunity to put their black money (money for which there is no real source or income that is not taxed) on the table and would say that they got it all from small donors (cash donations less than Rs 20,000 does not need any source). It is not difficult to make backdated donation receipts. This defeats the entire purpose of black money operation.
However, the Finance Ministry on Saturday clarified that exemption from Income Tax to deposit old currency notes in bank accounts will be given to only registered political parties subject to conditions mentioned in Section 13A of the Income Tax Act.“The Act includes maintaining books of accounts and other documents as would enable the Assessing Officer to deduce its income therefrom,” the Ministry said. It further added that in respect of voluntary contribution in excess of Rs 20,000, the political party will have to maintain a record of such contributions. “The political party has to submit a report to the Election Commission about donations received within a timeframe prescribed,” the Finance Ministry said.
Addressing the annual general meeting of industry chamber FICCI in New Delhi, Finance Minister Arun Jaitley on Saturday hinted that not all of the Rs 15.44 lakh crore worth of currency junked will be remonetised through the issuance of new notes as he said digital currency will fill the gap. Calling the scrapping of old Rs 500 and Rs 1,000 notes as “a courageous step”, he said the government could do it as India today has the capacity to take such decisions and experiment boldly.
The move will create a new Indian normal as the one that existed for the past seven decades is “unacceptable”, he said, adding that demonetisation will help rid the economy of high cash circulation that had led to tax evasion, black money and currency being used for crime. “One of the efforts of this exercise has to be that even though a reduced cash currency could remain, our conscious effort... (is) to supplement the rest with a digital currency,” he said.
As many as 17,165 million pieces of Rs 500 denomination and 6,858 million pieces of Rs 1,000 banknotes were in circulation on November 8 when the government made the surprise announcement. Analysis by Association for Democratic Reforms (ADR) and National Election Watch in past few years shows that about 75 percent of the sources of funds to political parties remain unknown and it is here that the real problem lies.
It is not a surprise that none of the Opposition parties, including the Congress and its leader Rahul Gandhi hasn’t uttered a word on political black money and hasn’t offered to give an example by daring to give own party’s financial details or declining any law-given immunity. That’s understood because all drink from the same pot and it tastes sweet.
But then why this double standard towards the common man? The ongoing demonetisation exercise, originally launched to counter black money and fake currency, has inflicted maximum pain on the poor, not the rich and powerful. The layman waits for hours in ATM/bank queue, face unemployment and financial loss, commits suicide because he couldn’t find enough cash for his daughter’s wedding amid the black money fight of the government, while the rich smiles all the way to the back doors of the banks.
Even in the post-demonetisation era, they have lavish weddings and joy of seeing bundles of new currency notes in their backyards, while it is a miracle for the aam aadmi even if he gets hold of a few pieces of new currency. Doesn’t the Prime Minister then owe an answer to 125 crore Indians, of which a good number are hard-working middle-class individuals, on the government’s double standard to the common man and the political parties when it comes to the issue of black money?
Set up commission to probe source of political parties’ funds: Kejriwal
Delhi Chief Minister Arvind Kejriwal on Saturday demanded setting up of a commission to probe source of funding of political parties.
Congress vice-president Rahul Gandhi on Saturday called the devaluation of the Rs 500 and Rs 1000 notes a “Modi-made disaster,” just a day after he likened the currency ban to a “firebombing” on honest Indians. “Just how we say ‘man-made disaster’ in English, demonetisation is a Modi-made disaster,” Rahul told a rally in Belgaum in Goa, where Assembly polls will be held next year. He accused PM Modi of being the first Prime Minister in the history of the country to attack the poor.
Kejriwal, on the other hand, also questioned the Central government’s decision to exempt political parties from paying income tax while depositing old Rs 500 and Rs 1,000 notes. He sought to link the Centre’s tax exemption decision to the meeting between Prime Minister Narendra Modi and Congress vice-president Rahul Gandhi on Friday, suggesting the announcement was outcome of the parleys between the two.
“Common people are being investigated if they deposit Rs 2.5 lakh individually. But if political parties are not going to be investigated even if they deposit Rs 2,500 crore following the decision, then it is wrong. “We demand setting up of an independent commission to probe into bank accounts details of political parties over the past five years, to investigate into their sources of funding,” Kejriwal said at a press conference.