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No returns filed by 300 political parties – finds I-T probe

New Delhi: A country-wide probe conducted by the Income Tax department has found that close to 300 registered political parties have never filed their tax returns and the Election Commission has now asked the department to issue notices to them.

The probe, conducted after the EC asked the Central Board of Direct Taxes (CBDT) to ascertain the financial status of these small parties for alleged violation of tax laws and money laundering, has been submitted to the election panel.

A number of parties also do not possess permanent account number (PAN), the bulky report, prepared by the assessment wing of the CBDT, said.

The EC had sent a list of suspect political parties to CBDT for probe early this year. It was alleged that people are floating such political parties in large numbers to evade taxes as donations to them are exempt from payment of income tax.

The EC has asked the department to intensify the probe and serve show-cause notices to these small parties under relevant sections of I-T Act and ascertain the source and end use of the funds they received.

The report has tracked the I-T returns of these small parties in 13 states including Tamil Nadu, West Bengal and those from the North East.

"The status of such small parties in the remaining states will also be sent to the EC soon," a senior officer involved in the exercise said.

While national and other major political parties file their I-T returns regularly, small and lesser-known parties are under the scanner, the officer said.

The I-T department, in its recent report, also probed the donors to these parties who provided more than Rs 20,000.

"The number of political parties registered with the Commission is almost touching the 1,200 mark. A recent law that exempted donations to political parties from income tax, for both the payers and the payee, has caused a spurt in the formation of new political parties," Chief Election Commissioner S Y Quraishi had said earlier this year.

Quraishi had made a strong pitch for providing tax benefits on donations to only those political parties which prove their strength at the hustings as exemptions on such funds have led to mushrooming of new parties.

Observing that almost 75 to 80 per cent of the registered political parties have not participated in any elections for the last several years, the CEC said that although the Commission has power to register political parties, it does not have the power to de-register them.

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