The Union government is planning to amend the law to take away income tax exemptions to political parties if they do not file returns on time. This comes even as private watchdogs picked holes in the new Budget provisions to bring transparency in political funding.

The Finance Bill 2017, placed in the Lok Sabha on Wednesday as part of the Budget, seeks to amend the law by making it mandatory for parties to file returns by December-end for any assessment year. This and other amendments related to poll funding in Section 13A of the act will take effect from April 1, 2018, once the Budget provisions, which also include restricting donations in cash to Rs 2,000, are passed by Parliament.

For the 2017-18 fiscal, the parties have to file the returns by December 31, 2018. Officials said according to the law, parties enjoy exemption from payment of income tax, but half of them do not file income tax returns (ITR) on time.“We will give a notice and cancel their exemption status. Through this, strictest discipline will come. Our experience is, for the last two years, more than 50% parties are not filing ITR on time. These are smaller parties which do not bother to file returns,” Revenue Secretary Hasmukh Adhia was quoted by PTI as saying. The Budget proposals also talk about issuance of electoral bonds by amending the RBI Act.

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