Is it fair to spare political parties from income tax investigation?

Is it fair to spare political parties from income tax investigation?

Is it fair to spare political parties from income tax investigation?

When the entire nation is still bearing the treacherous ‘short-term difficulties’ of demonetization which do not seem to be ending anytime sooner, another announcement seems to be adding salt to the wound. Government declared that political parties depositing notes of Rs 500 and Rs 1000 will not be accounted for by the income tax investigation.

Political parties being exempt from taxes don’t seem to be going down well with people. They believe that political parties shouldn’t have been spared while people who have nothing to do with scams and black money are facing the worst days of their lives.


1. Only parties not individuals: It is to be noted that only the accounts of political parties are to be free from taxes. Politicians as individuals will still be in the radar of income tax investigations. This is fair enough because the party funds and accounts mainly come from different sources of funding and cannot be taken into scrutiny.

2. Law says so: According to Section 13A of the Income Tax Act, 1961, political parties are to be exempted from income tax in respect to their income from house property, other sources, capital gains and income by voluntary contributions received from any individual. This is not something that the Modi government has framed. This law has existed always. It is wrong of people to be blaming government of trying to shield politicians from taxes and effects of demonetization.

3. Limit on contributions: Anonymous contributions can be made into the account of political parties only up to Rs. 10,000 per person. If the amount voluntarily contributed is more than that, the party needs to keep record of the person who made the contribution and the income tax department is welcome to look into these records. This seems fair enough and provides no grounds for anyone to blame the government for being tolerant to political parties.

4. Transparency: There have been various claims that the political parties need to reveal the source of their funds that they use during election campaigns but that has had no effects. This, however, can change a few things as political parties will be able to retain funds but individual politicians will be under scrutiny. This could lead to transparency in near future.

5. Better than retaining money in other forms: The source of the black money might remain unidentified but with all the money in banks instead of in other forms to be used during elections, parties will have to be careful on how they spend it. They will be accountable for how much they spend in elections which is what people are mostly asking for. Exempting political parties from taxes to encourage them to deposit everything in their party account is going to be beneficial in the long run.


1. Loophole: If political parties can deposit the demonetized notes into their party accounts without having to reason or provide details of where the money came from, this open the worst ever loophole for corrupt, black money to remain in their respective hands. The whole point of demonetization to prevent corruption is a lost cause with this loophole existing.

2. Political favors: Now that anyone can deposit their black money into the account of a political party without having to provide information on where the money came from, this has opened doors for all sorts of favoritism and vote polarization to prevail. They will simply slip off the money into the party account and get all sorts of political favors which are the backbone of corruption in India.

3. The very mother of evil: It is a known fact that most form of black money, scams and corruption is fed by political parties and politicians. If they have the advantage of getting all their money exempted from tax, people have every right to be furious at the government and their intentions of freeing India from black money and corruption.

4. Unfair to common people: Common citizens are supposed to bare it all before the government - their lifelong savings, gold for their daughters, property to help them later in life. While common people are expected to own nothing that they will not be harassed for at some time or the other, political parties are being kept out of questioning which is clearly unfair to common people facing the dilemma of their lifetime standing in queues to withdraw their legit hard-earned money.

Exempting political parties from taxes could be a decade old law but at times such as this and even under normal circumstances, it is unfair to common people and opens a loophole through which corruption and black money laundering can still flourish.
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  • RE: Is it fair to spare political parties from income tax investigation? -Gaurav Kumar (12/20/16)
  • Political parties are always exempted from income tax and such laws are not established by Modi government. So alleging the ruling government would be naive. But the noise of political parties should be tightened and scrutinized by IT department by the way of amendment in the current laws. Electoral reforms are round the corner as voices are rising to bring a sea change.