CBDT examining allegations of tax evasion by political parties

New Delhi, Jan 18 (PTI) The Revenue Department today saidit is examining reports on political parties provided by theElection Commission and the Home Ministry for violation oftax laws and allegations of money laundering.

"We have received some reports on political parties fromthe Election Commission. The reports are under examination,"Central Board of Direct Taxes (CBDT) Chairman Sudhir Chandratold reporters here.

Tax authorities, according to income tax sources, willalso go into the details provided by the Home Ministrypertaining to money laundering by political parties, which areclaiming tax exemption.

It has been alleged that people are floating politicalparties in large numbers to evade taxes as donations to suchentities are exempt from payment of income tax.

"The number of political parties registered with theCommission is almost touching the 1,200 mark. A recent lawthat exempted donations to political parties from income tax,for both the payers and the payee, has caused a spurt in theformation of new political parties," Chief ElectionCommissioner S Y Quraishi had recently said.

He had also asked for a report from CBDT about suchdefaulting parties.

Besides looking at the details provide by the ElectionCommission, the officials said that the income tax authoritieswould be scrutinising their I-T returns and background ofdonors who provided more than Rs 20,000.

"All such reports are being examined with the help ofproper law enforcement agencies. The department is one of thelargest consumers of the suspicious and cash transactionreports generated by the Financial Intelligence Unit and theunit has been sending us a huge data," income tax sourcessaid.

Quraishi had recently made a strong pitch for providingtax benefits on donations only to those political parties,which prove their strength at the hustings, as exemptions onsuch funds have led to the birth of several new parties.

Observing that almost 75 to 80 per cent of the registeredpolitical parties have not participated in any elections forthe last several years, the CEC said that although theCommission has power to register political parties, it doesnot have the power to de-register them.