Sounds strange but it is true. The Finance Secretary has today ruled that all the political parties are hereby exempted under Income Tax Law and will be able to deposit all the old currency notes in their bank accounts on or before 31st December 2016. According to the sources, while the Modi government is going after the black money hoarders with the stringent law, it is still struggling to find the ways to keep a check on illegal funding in political parties. The above thing sums up to only one thing that, political parties will not come under any scrutiny from I-T department for cash deposits in the bank account in old currency notes.
Modi government is famous for coming up with surprises, first they gave the surprise of demonetization to the nation and now it is exemption of political parties from the scrutiny of cash and bank deposits in old currency notes. Based on the available information from the reliable sources, Finance Secretary Mr. Ashok Lavasa, today made an announcement that, All the political parties are herein exempted from the hassle of scrutiny by the Income Tax department under the Income Tax Law while depositing the cash in the bank in form of Old Currency Notes.
According to the sources, this news has come as shock to the people as Modi Government has laid down the stringent rules for the black money hoarders and at the same time has given the free hands to the political parties by exempting them from the Income Tax Law while depositing the money in bank in the old currency. Revenue Secretary Hasmukh Adhia said deposits in bank accounts of political parties are not to be taxed. However, the tax exemption on deposits by political parties subject to individual donations not exceeding Rs 20,000 in cash and with a proper receipt. “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 told reporters here.
According to the sources, under 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 is would not even be included in the total income of the political party for the purpose of assessment. However, the tax exemption is applicable only if the political party keeps and maintain such books and other documents of the income and the accounts are audited by a Chartered Accountant, says the report.
When media asked if the PAN (Permanent Account Number) will be mandatory for the deposits made by Agriculturist 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 lakh. If he files Form 60, then PAN is not required. Those who are not able to give a declaration, they have to give PAN.” Adhia said the tax authorities will not unnecessarily chase deposits of less than Rs 2.5 lakh. “We will not go unnecessarily after those with Rs 2.5 lakh deposits. But where we find people have tried to misuse the provision by putting in multiple accounts in different banks (we will go after them),” he said.
After the shock demonetisation announcement on November 8, the government allowed junked Rs 500 and Rs 1000 notes to be deposited in bank accounts. For individuals and companies holding unaccounted cash, it has offered new tax evasion amnesty scheme wherein 50 per cent tax will be charged on declarations and quarter of the total sum be parked in a non-interest bearing deposit for four years.