The Congress party has alleged that the Income Tax Department has ordered banks to transfer an amount of Rs 65 crore from its account.
Congress Treasurer Ajay Maken had said that this is a kind of economic terrorism and the Congress Party is being deliberately targeted while political parties are exempted from income tax.
He also said that his tax demand of Rs 210 crore is already pending with the Income Tax Appellate Tribunal.
Let us tell you whether political parties also come under the purview of income tax. If parties are granted tax exemption, what are the conditions?
Are political parties required to pay income tax?
According to the Income Tax Act 1961, political parties registered with the Election Commission are given income tax exemption with certain conditions.
Section 13A of the law says that political parties will not have to pay tax on income from house property, income from other sources or money donated. This will not be added to the total income of the financial year.
However, the condition is that the political party will have to maintain the details of this income and present it for audit. It is important to keep records of all donations received above Rs 20 thousand. Apart from this, political parties are not to accept any donation above Rs 2 thousand in cash.
This exemption from income tax will be applicable only when an authorized person of the party or the treasurer declares the details of donation before the Election Commission. The political party will have to make this announcement before the last date of income tax filing.
Do political parties also have to file income tax returns?
If the income of a political party exceeds the exemption limit given under Section 13A, then it becomes mandatory for political parties to also file income tax returns.
Section 139 (4B) states that if the total income of any party exceeds the income tax exemption limit, then the CEO or top official of the party will have to file a return on the prescribed form.
Let us tell you that Congress Party Treasurer Ajay Maken had alleged that banks have been instructed to transfer Rs 65 crore from the accounts of IYC and NSUI.
He had said that it is a normal thing that BJP also does not pay income tax. He said that in the year 2018-19, the party had received a total donation of Rs 142.83 crore, out of which Rs 14.49 crore was in cash.
This was met by Congress MPs and MLAs. He said that the Income Tax Department has placed a tax demand of Rs 210 crore for a cash donation of only Rs 14 lakh.