The Income Tax Department on Tuesday extended the date to November 30 for filing of applications by Electoral Trusts for getting tax benefits on donations given to political parties.

“The Central Board of Direct Taxes (CBDT) has permitted Electoral Trusts to file their applications up to November 30, 2013 in respect of Assessment Year 2014-15 for approval under clause (22AAA) of Section 2 of the Income-tax Act, 1961...,” the Finance Ministry said in a statement.

Earlier, the last date for filing applications by such non-profit companies for the next assessment year was July 31.

The Government notified the Electoral Trusts Scheme earlier this year to streamline the process and bringing in more transparency in the funds provided by corporate entities to the political parties for election-related expenses.

The move was aimed at bringing greater transparency in corporate funding of political parties’ poll expenses. Many business conglomerates, including Tatas, Vedanta Group, Aditya Birla group and Bharti Groups, have in the past disclosed having made contributions to different political parties through their trusts.

The scheme permitted the entities to register non-profit companies having ‘Electoral Trust’ as part of their names, thus differentiating them from the companies having other business interests.

As per the scheme, such companies can get tax benefits only if they distribute 95 per cent of total contributions received by them in any financial year to the registered political parties within that year itself.

Besides, they can not receive any contribution in cash and they are required to take the Permanent Account Number of all contributors who are resident Indians, and passport number of non-resident Indian citizens at the time of receiving the contribution.

These Electoral Trust companies are not allowed to accept contributions from foreign citizens or companies.

As per the rules, all donations to political parties should be made only through cheques to get tax benefits.

Our Bureau adds:

According to the Association of Democratic Reforms, a non-Government organisation, the total income of national political parties as donations from Electoral Trusts stood at Rs 105.86 crore between 2004-05 and 2011-12, which is 2.16 per cent of the total income of the parties.

According to ADR, which has filed a PIL in this regard, three Vedanta Group firms – Sterlite Industries India Ltd, Sesa Goa Ltd and Solaries Holdings Ltd – contributed Rs 9.78 crore to the Congress. During the same period, the BJP received Rs 19.41 crore from two firms – Vedanta Madras Aluminium Ltd, Sesa Goa Ltd – and another entity called Public and Political Awareness Trust (which alone has given BJP Rs 14.50 crore).The ADR said it culled this information from the income-tax returns of the two major political parties.

The London Stock Exchange-listed Vedanta, in its 2004 annual report, has admitted to Sterlite making a donation of $1.2 million to the Political and Public Awareness Fund in India.

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