Deposit in bank accounts of political parties exempt from tax

NEW DELHI: The government has said political parties depositing the demonetised Rs 500 and Rs 1,000 notes in their accounts will not face income tax investigation.

"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," revenue secretary Hasmukh Adhia told reporters.

The Section 13A of the Income Tax Act, 1961 grants exemption from tax to 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.

Adhia was replying in response to a question whether the government is also investigating political parties/political treasuries depositing their own cash in banks.

This came on a day the government gave tax offenders a last chance to come clean.

The exemption in respect of contributions is available only when in the case of all voluntary contributions in excess of ten thousand rupees, such political party keeps and maintains a record of such contribution and the name and address of the person who has made such contribution.

This mean anonymous contribution cannot be more than Rs 20,000. Farmers exempt from tax on agricultural income will need to furnish a self-declaration that his earnings are less than Rs 2.5 lakh in a year to make deposits in bank without PAN. “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),” Adhia said.