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What Is Corporate Funding Of Elections?

Any company can contribute as much money as they want to any political party as long as there is no limit to how much they can contribute.

As per the Association for Democratic Reforms, the total declared income of all the national parties for the financial year 2017 – 2018 amounted to  ₹ 1,198.75 crores in total.

As per the Section 29A of RPA (Representation of the People Act), 1951, every body or association of individual citizens is required to register them with the EC (Election Commission) to act as a political party. The political party should confirm all conditions pertaining to corporate funding and here we have discussed the points regarding the same.

To give some context, the national parties include the Bharatiya Janata Party (BJP), Indian National Congress (INC), Bahujan Samaj Party (BSP), Nationalist Congress Party (NCP) Communist Party of India (CPI), Communist Party of India (Marxist) (CPM) and All India Trinamool Congress (AITC).

As per Section 2(h) of the Right to Information Act, 2005 (RTI Act), such national political parties should be considered ‘public authorities’ by the Central Information Commission (CIC). Any public authority established or constituted by law is a public authority. Public authorities are required to disclose information and answer questions. Inquire about the funding sources of these national political parties.

In this case, the CIC decided that such national political parties are to be considered as public authorities in the larger interest of democratic principles because of their main function, i.e., forming the government and being accountable to citizens.

Are the political parties mandated to disclose the details of the amount of corporate funding?

Section 29A of the Representation of the People Act, 1951 (RPA) states that every association or body of individual citizens of India is required to register themselves with the Election Commission (EC) to be able to function as a political party. Such associations or bodies of individuals have to declare that they shall always strive to keep the spirit of the Constitution of India, 1949 (Constitution) by imbibing the principles of socialism, secularism and democracy.

Further, Section 29B of the RPA states that every political party may accept any amount of contribution which is voluntarily offered to it by any person or an eligible company as per the provisions of law, which is discussed in the next part of this article.

From the perspective of disclosure, all registered political parties are required to file the contribution report with the EC.  Such a report to contain the details of the donors who have made a contribution above  ₹ 20,000 to such a political party for a specific financial year.

The contribution report lists the name of the contributor, address, PAN number, and mode of contribution. A political party must confirm whether all corporate funding conditions have been met if any of the donors are corporations or eligible companies. Next, the article will discuss the basic requirements a corporate entity must meet before contributing to a political party.

See this contribution report filed by the All India Trinamool Congress for the financial year 2017-2018.

What are the recent changes in law related to corporate funding of elections?

Section 182 of the Companies Act, 2013 (Companies Act) deals with the prohibitions and restrictions regarding political contribution by a corporation. It is pertinent to note that, approval of the Board of Directors (Board) of the body corporate is a must before making any kind of political contribution.
This provision was amended via the Finance Act, 2017.

Let us compare and contrast this provision pre and post the aforesaid amendment.

Firstly, any company which is not a Government company as per the provisions of the Companies Act, and has been in existence for at least three years may contribute any amount directly or indirectly to any political party, i.e. eligible company.

This provision also provided for an upper limit on the amount eligible companies could contribute before this amendment. A company must not contribute more than 7.5% of its average net profits in the three years preceding a particular financial year to any political party.
This amendment omitted the 7.5% threshold.

In essence, now there is no bar on the amount that can be contributed by a corporation towards the funding of any political party.

Secondly, every eligible company is required to disclose its total contributions to political parties in its profit and loss statement. An account payee check or bank draft or electronic clearing system through a bank account shall be used to contribute such amounts. The current provision allows eligible companies to contribute to political parties with great flexibility. Therefore, such eligible companies can contribute through any instrument issued pursuant to any scheme notified under any law in force for the time being.

The old provision explicitly required the name of the party to whom the contribution is made to be disclosed. Nevertheless, this aspect was completely replaced by the amended provision.

Can GST be refunded? When can a GST refund be claimed?
Visit the GST portal to claim the refund of the GST tax paid. You’re eligible to receive the GST refund along with the rate of interest of 6%.

What is the support available for collateral free borrowing?

The Government of India, the Ministry of MSME and SIDBI have set up a Credit Guarantee Fund Trust for the MSMEs to facilitate the credit flow to the MSME businesses.

My employer deducts and deposits TDS on my behalf. Do I still need to file my Income Tax Return?

If your annual income exceeds 2,50,000, you must file your income tax returns. This must be done even when your employer deducts the TDS annually on your behalf.

After completion of ISO implementation audit and ISO documentation audit, ISO certification body offers certificates that will be effective for 3 years.

Can a Trustee take salary from a trust fund?
A trustee can draw compensation only if it is for Trust related work.However, the amount should be reasonable and within market standards.Otherwise it is illegal.


We are always available to provide you with legal advice if you need it. If you have any thoughts or feedback for us, please feel free to contact us or leave a comment below. 

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