The Narendra Modi government put the whole nation into a state of utter panic and chaos when they dropped the bomb of demonetisation last month. In the last 35 days, a state of complete mismanagement of the scheme has seen people standing in long queues outside banks, empty ATMs and numerous cases of deaths from the entire nation. Still, people are supporting the government in the hopes of a cleaner economy reduced corruption.
Now that the deadline for submitting cash into bank accounts is coming closer, the Government of India has released a statement saying political parties depositing old ₹500 and ₹1000 notes in their accounts will be exempted from income tax.
The exemption would only be valid for donations below ₹20,000 per individual and if properly documented. However, a single donation for above ₹20,000 has to be made through cheque or bank draft.
Revenue secretary Hasmukh Adhia said that deposits in bank accounts of political parties are not going 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.”
Exemption of taxes without any monetary limit is granted to political parties by Section 13A of the Income Tax Act of 1961. This income could be from house property, capital gains or other sources. This exemption is applicable only if proper documentation is maintained by the parties and audited by a Chartered Accountant.
Moreover, farmers who are exempted from paying taxes have to make a self-declaration that their earnings are less than ₹2.5 lakhs a year for making bank deposits without PAN.
“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.”
As always, it is the common people that are suffering from the government regulations and the political parties have made a way to steer clear of the aftermaths of demonetisation.
News Source: Times of India