NEW DELHI: BJP Government on Friday announced that political parties depositing old 500 and 1,000 rupee notes in their accounts will be exempted from income tax provided through donations and taken below Rs 20,000 per individual and properly documented.
Revenue Secretary Hasmukh Adhia said the government is not tinkering with the tax exemption available to political parties and they are free to deposit old 500 and 1000 rupee notes in their bank accounts. But these deposits will, however, be subjected to the condition that individual donations taken in cash do not exceed Rs 20,000 and are properly documented with full identity of the donor.
A single donation if above Rs 20,000 as per the existing law has to be done through cheque or bank draft, he added.
Farmers will need to create PAN cards
Besides, farmers who are already exempted from paying tax on agriculture income will need to furnish a self-declaration that their earnings are less than Rs 2.5 lakh in a year to make bank deposits without PAN.
For those unable to do that, furnishing PAN will be required, Adhia added.
He also said deposits in bank accounts of political parties are not to be taxed.
“If it is a deposit in the account of a political party, they are exempt. But if it is deposited in individual’s account then that information will come into our radar. If the individual is putting money in his own account, then we will get information,” he told reporters here.
According to I-T amendments
Section 13A of the Income Tax Act, 1961 grants exemption from tax to political parties in respect of their income. This income could be from house property, other sources, capital gains and income by way of voluntary contributions received from any person.
These are the categories of income which qualifies for exemption without any monetary or other limit and the income so exempted would not even be included in the total income of the political parties for the purpose of assessment.
However, the tax exemption is applicable only if the political party keeps and maintain such books and other documents of the income and the accounts are audited by a Chartered Accountant.
When asked if PAN will be mandatory for deposits made by agriculturalist, he replied : “A farmer has to give self declaration in Form 60 where he has to declare that his income is less than Rs 2.5 lakh. If he files Form 60, then PAN is not required. Those who are not able to give declaration, they have to give PAN.”
Adhia said the tax authorities will not going to chase unnecessarily for deposits of less than Rs 2.5 lakh and that, within one/two months’ time banks will accumulate PAN numbers of all existing account holders except for Jan Dhan/BSBD account.
Since the demonetisation announced on November 8, the government allowed banned Rs 500 and Rs 1,000 notes to be deposited in bank accounts.