Supreme Court retains tax relief for parties

NEW DELHI: The Supreme Court on Wednesday threw out a petition challenging total tax exemption given to political parties, saying that they needed funds to propagate their ideologies.

In the public interest litigation, the petitioner had asked why the common man was being taxed while political parties were exempt. Donations to political parties are 100 per cent exempt from tax, he said, challenging the relevant provisions in the IT Act and the Representation of the People Act as arbitrary and deplorable.

But a bench led by new Chief Justice JS Khehar rejected his argument. A political party needs money, the CJI suggested, to project its ideology and swing around the electorate to its side.

Parties need money to ensure that the voter is represented in governance and the legislature, he said. Sharma tried to argue in vain that the term ‘political party’ did not have any constitutional status and was only introduced statutorily in 1989.

The CJI didn’t accept it as a reason. “The Constitution does not recognise the Hindu undivided family either, but it is recognised under the tax laws,” he commented. The CJI also rejected an argument that the step was discriminatory. “

It is up to those who govern to decide who should be taxed and who should be exempt,” he said, holding out the example of agricultural income which is still exempt from taxes in the country.

The bench, also comprising Justice DY Chandrachud, rejected a plea to extend such 100 per cent exemption to unattached independent lawmakers. An individual only fights for himself, but the party which fights on the basis of a particular ideology needs to set up an establishment to run its affairs, the CJI said. “All this needs money.”