Govt?s tax exemption to parties ? Rs. 1,033 cr in 5 yrs

Hindustan Times, September 25, 2012

Are political parties required to reveal the source of their funding under the Right to Information Act? While the CPI agreed to disclose its funding to an NGO, other parties have flatly refused to do so.

Association for Democratic Rights (ADR), sought the information under RTI, claiming that political parties are covered under RTI since they get huge tax exemption from the government.

Four major political parties in India have got Rs. 1,033 crore from the government in form of income tax exemption, replies received from the income tax department under the transparency law has revealed.

ADR then filed RTIs with the major political parties seeking information regarding source of their funding in a bid to bring transparency in the Indian political system. The NGO claimed that since the parties were receiving income tax exemption they were public authorities as per definition of the Right To Information (RTI) Act.

The Communist Party of India agreed with ADR. ?CPI is a public authority as the organization is substantially financed directly or indirectly by government funds,? party general secretary A B Bardhan told ADR, while providing details of the party funding. CPI also said it has an appellate authority as required under the RTI Act.

Other political parties disagreed.

Congress treasurer Motilal Vohra in a letter to ADR said the party does not come under RTI, while returning the RTI letter with the postal order. The Nationalist Congress Party (NCP) said it didn’t have enough man-power to provide the information sought. The BJP and BSP did not respond to the RTI applications.

Taking tax exemption amounts to substantial indirect funding from the government, a ground enough to declare an organization ?public authority? under the RTI law.

Punjab and Haryana High Court had declared Punjab Cricket Association, a private body, as a public authority under the RTI law for availing exemption of the entertainment tax. Similarly, Punjab State Information Commission declared Christian Medical College Ludhiana as a public authority for seeking exemption from paying income tax.

?I don?t understand why the political parties are not willing to share information on their funding,? said Anil Bairwal, national coordinator of ADR.

Data compiled by ADR shows that the Congress maximum income tax exemption of Rs. 557 crore between 2006-07 and 2010-11 followed by BJP (Rs. 282 crore) and BSP 97 crore.

The political parties are exempted from paying any income tax under section 13 (A) of the Income Tax Act on the ground that the money is being used for ?benefit of public?. Apart from tax exemption, the parties have also got prime property in Lutyens Delhi for their offices, for which they have to pay a nominal rent.

The ADR has now filed an appeal with the information watchdog, the Central Information Commission, against rejection of its RTI application by the political parties. Considering the wider ramification of the appeal, the full bench of the CIC is expected to hear the case on Wednesday.

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