New Delhi: The newly- created ‘electoral trust’ structure for corporate funding of political parties is expected to bring in greater transparency about source and legitimacy of funds used for elections, Corporate Affairs Minister Sachin Pilot has said.
Terming it a ‘step in right right direction’, the minister said this framework should, at least partly, address the questions that are often raised about source of funds used by political parties during elections.
“This will bring about a greater degree of transparency and it will help parties and companies to be more transparent and disclose much more about the source of funds and the legitimacy of the source of these funds,” Pilot told PTI.
This new concept provides for companies and entities looking to provide funding to political parties to set up non-profit companies, which mandatorily contain ‘Electoral Trust’ in their names. Certain tax benefits are also available on funds given to political outfits through these entities.
At least six major corporate groups have already set up such electoral trusts, according to latest official data.
Besides, more than two dozen other business groups are firming up similar plans.
The six registered electoral trusts are those of Mahindra group, Anil Ambani-led Reliance Group, Anil Agarwal-led Vedanta Group, Sunil Mittal-led Bharti Group and Kolkata-based K K Birla Group.
Election funding for political parties has always been a topic of discussion and there have been demands from various quarters to make the process more transparent.
Earlier such entities could be formed under Section 25 of Companies Act, 1956 and under tax department’s Electoral Trusts Scheme, 2013. Now, such registrations are being governed under Section 8 of new Companies Act, 2013.
To get tax benefits, Electoral Trusts need to distribute 95 per cent of total funds collected during a fiscal to registered political parties within that year itself.
Besides, they cannot receive any contribution in cash and they are required to take the Permanent Account Number of all contributors who are resident Indians, and passport number of non-resident Indian citizens while receiving the contribution.
These entities are barred from taking contributions from overseas entities.(PTI)
