The Finance Ministry on Saturday clarified that there are provisions in the Income Tax Act to scrutinise the accounts of political parties.
Referring to news reports that income tax returns of political parties registered with Election Commission cannot be scrutinised with regard to deposit of demonetised currency notes, the ministry, in a statement, said: “There are enough provisions in the Income Tax Act to scrutinise the accounts of the political parties and these political parties are also subject to other provisions of Income-Tax, including filing of returns.”
According to the ministry, the exemption from Income Tax is given to only registered political parties subject to conditions like maintenance of books and other documents to enable the assessing officer to deduce the their income.
Political parties have to maintain record of voluntary contributions made by persons in excess of Rs 20,000 including the names and addresses of the donors.
The political parties have to submit a report to Election Commission about donations received within the prescribed timeframe.
The accounts of each such political party is to be audited by a chartered accountant, the ministry said.