No political party can accept donations in Rs 500 and Rs 1,000 notes: FM Arun Jaitley

No political party can accept donations in Rs 500 and Rs 1,000 notes: FM Arun Jaitley

At the 2016 Economic Times Awards for Corporate Excellence, Mumbai, on December 17, 2016, Finance Minister Arun Jaitley clarified that no political party can accept donations in Rs 500 and Rs 1,000 notes since they have been rendered illegal tender. Any party doing so would be in violation of

law. He declared that the government has not granted any new exemption to registered political parties either after 8th November demonetization or with the introduction of the Taxation Amendment Act, 2016. He said income and donations of political parties fall in the purview of Section 13A of the Income Tax Act 1961 and there is no change in its provisions.

iii. Just like anyone else, political parties can also deposit their cash held in the old currency in banks till December 30, provided they can satisfactorily explain the source of income and their books of accounts reflect the entries prior to November 8. If there is any discrepancy in the books or records of political parties, they would be liable to be questioned by the income tax authorities.

iv. The clarification was made after Revenue Secretary Hasmukh Adhia said that if the money is a deposit in the account of a political party, it is exempt from paying tax and neither will it face scrutiny.