New Delhi, April 30: Jaswant Singh today gave his party a tax break. Well, not his party alone, but all parties.
The finance minister announced exemption from capital gains tax for political parties. The tax is levied on the difference between the cost of buying an asset and the price at which it is sold.
Many described the move as designed to help older parties like the Congress and the BJP with properties spread across the country.
However, top finance ministry officials said it was part of the attempt to clean up political funding and to break the link between black money and politics.
Parties mostly own property and hold caches of fixed deposits and government-sponsored instruments like National Savings Certificates. They usually do not invest in equity.
“The two big parties (the BJP and the Congress) have assets worth several thousand crores of rupees... They have prime property in all cities in the country,” said Abani Roy, an MP of a small party, the RSP.
The bigger parties have bought property at choice locations at throwaway prices and have also received generous gifts from members and admirers.
The now much-splintered Janata Dal, which inherited the Congress (O)’s assets, and the CPM are in the second rung, but they are unlikely to try and cash in on the relief.
“One fails to understand why such exemption should be given to political parties. It’s like awarding oneself a favour. Exemptions should be given for justifiable reasons and parties have none... they are not in the business of making money. So why give them capital gains exemptions'” asked Dinesh Trivedi of the Trinamul Congress.
The move has once again raised the issue of why political parties should not compulsorily get their accounts and assets evaluated by certified accountants and publish these in the public domain.
Parties continue to be secretive about their source of funds in spite of recent efforts to break the nexus with black money.
The Indrajit Gupta Committee on political funding had suggested that the government finance elections, the money being distributed on the basis of each party’s vote share.
Trivedi said: “Exemptions don’t really make sense unless you can say they are being exempted because they earn so much or they own so much."
“Let’s come clean on this first,” he added.