February 25, 2015
https://www.facebook.com/mehtarahulc/posts/10152620037391922
https://www.facebook.com/mehtarahulc/posts/10152620037391922
why so many spririous political parties exist --- section-80GGC (tax exemption to donations to political parties), and no annual fee for political party . And how ArKe used this section to get Rs 2 crore of black money for contribution !!
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solution --- remove section-80GGC , make all cash (contribution - Rs 100 per votes the party got) taxable at 30% rate.
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Income tax act section-80GGC says that contribution to political parties will be tax exempt. So if I start a political party, and I say I am earning Rs 10 lakh per year, and then "donate" that RS 10 lakh to my party , then tax I will have to pay will be Rs 0 . And the money stays with me, and I can use it at my discretion !!
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Also, whatever cash income I have, I can deposit it to parry by fake namess, each name giving me say Rs 20000 and I can deposit that cash in bank by paying zero tax !!.
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So when ArKe got Rs 2 crore of cash, what he did is that he deposited the cash in faceless companies' bank account. If a company deposits such cash in bank, then they will have to pay corporate tax of 40% i.s. Rs 80 lakhs !! But within days, the Rs 2 crore was moved into AAP account, and so company got tax deduction of Rs 80 lakhs under section-80GGC , and thus Rs 2 crore of black money moved into AAP account.
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But of secion-80GGC is removed, then that company will have to pay tax of Rs 80 lakhs for depositing Rs 2 crore in bank, and thus such a deal would cost Rs 80 lakhs to ArKe.
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Solution I propose is that remove section 80GGC . And tax cash contribution to political parties minus votes it got at the rate of 30% .
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And impose Rs 100,000 per year minus candidate deposits they paid as annual fee. So if a party has fielded 10 MLA candidates or 4 MP candidates , then cost would be zero, Otherwise, the part would have to pay Rs 100000 as annual fee.
.
This will reduce use of black money in election as well as reduce number of spurious parties.
.
.
solution --- remove section-80GGC , make all cash (contribution - Rs 100 per votes the party got) taxable at 30% rate.
.
Income tax act section-80GGC says that contribution to political parties will be tax exempt. So if I start a political party, and I say I am earning Rs 10 lakh per year, and then "donate" that RS 10 lakh to my party , then tax I will have to pay will be Rs 0 . And the money stays with me, and I can use it at my discretion !!
.
Also, whatever cash income I have, I can deposit it to parry by fake namess, each name giving me say Rs 20000 and I can deposit that cash in bank by paying zero tax !!.
.
So when ArKe got Rs 2 crore of cash, what he did is that he deposited the cash in faceless companies' bank account. If a company deposits such cash in bank, then they will have to pay corporate tax of 40% i.s. Rs 80 lakhs !! But within days, the Rs 2 crore was moved into AAP account, and so company got tax deduction of Rs 80 lakhs under section-80GGC , and thus Rs 2 crore of black money moved into AAP account.
.
But of secion-80GGC is removed, then that company will have to pay tax of Rs 80 lakhs for depositing Rs 2 crore in bank, and thus such a deal would cost Rs 80 lakhs to ArKe.
.
Solution I propose is that remove section 80GGC . And tax cash contribution to political parties minus votes it got at the rate of 30% .
.
And impose Rs 100,000 per year minus candidate deposits they paid as annual fee. So if a party has fielded 10 MLA candidates or 4 MP candidates , then cost would be zero, Otherwise, the part would have to pay Rs 100000 as annual fee.
.
This will reduce use of black money in election as well as reduce number of spurious parties.
.
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