New Delhi, July 07: Donations from business houses to political parties through “electoral trusts” would be cent per cent exempt from tax, Finance Minister Pranab Mukherjee said in his Budget Speech on Monday.
Donations to parties are already tax-free. The trust route will provide an alternative to corporate houses that wish to finance polls, but don’t want to be identified with a party.
“It is a positive move to ensure transparency in funding political parties,” said former Reserve Bank of India governor Bimal Jalan.
“This will change mindsets. It won’t eliminate underhand dealings in one stroke but provide incentive to give everything in accounted money and get benefits,” Congress spokesman Abhishek Manu Singhvi said.
In 2003, the NDA government had allowed individuals and companies to seek cent per cent rebate on donations to parties.
Having introduced the concept, the BJP, predictably, has welcomed the announcement. Senior leaders LK Advani and Arun Jaitley had, in fact, written to Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee supporting the move.
The Left parties have opposed the move and demanded its reversal. “It will be the fountainhead of all political corruption,” CPI (M) leader Sitaram Yechury said.
CPI leader Gurudas Dasgupta said the move would make the political system subservient to India Inc.
–Agencies