This raises concerns about the possible misuse of the IT exemption by those who do not stand for election
On September 23, the Election Commission notified the updated list of registered political parties, which included 2,796 unrecognized registered parties, when it requested power to deregister inactive parties.
The EC has expressed concern about the possible misuse of the income tax exemption by parties that do not stand for election. Important EC sources said on Saturday that the Law Department has yet to respond to the recent EC proposal to gain the power to deregister inactive parties. A senior official said that only 673 parties, including recognized and unrecognized, participated in the 2019 elections in Lok Sabha. As of March 2019, the list of registered unrecognized parties had 2,293 names.
Another senior official said the EC had expressed concern that the income tax exemption on donations granted to parties registered under Section 13A of the Income Tax Act could be misused by some. The official said that not only was the proposal sent to the Justice Ministry, but the case was also brought to the attention of the Central Council of Direct Taxes.
One of the concerns was that some of the registered parties might collect donations and use them for other purposes, operating as shell entities and laundering money, the official said. The official said the EC had proposed to withdraw the registration of parties that do not stand in two consecutive elections, parliamentarians or assemblies.
While the EC has the power to register parties under the Representation of the People Act 1951, it does not have the power to deregister parties that are inactive.
The latest party list includes eight recognized national parties: the Trinamool All-India Congress, the Bahujan Samaj Party, the BJP, the CPI, the CPI (M), the INC, the NCP and the National People’s Party, which is the latest addition, and 54 recognized States Parties, some of which are recognized in more than one State.