SC to hear Plea challenging Exemption to Political Parties

Ambiguity - Supreme Court - Tax - Taxscan

A writ petition challenging the provisions of the Income Tax Act and the Representation of Peoples Act giving tax exemption to the political parties has been filed before the Supreme Court.

The petition filed by Supreme Court Advocate M.L. Sharma has challenged the constitutionality of Section 13A of the Income Tax Act of 1961 and Section 29 of the Representation of People Act, 1951. The petition has asked the apex court to decide on why ordinary persons are taxed while political parties enjoy exemption from tax.

“Political parties registered with the Election Commission of India are 100 per cent exempted from paying Income Tax under Section 13A of Income Tax Act, 1961 as long as the political parties file their Income Tax Returns every assessment year along with their audited accounts, income/expenditure details and balance sheet,” the petition said.

Earlier, there were rumors regarding absolute exemption to political parties in depositing banned old currencies during the 50 days window period. Subsequently, both Finance Minister and CBDT had clarified that there are enough provisions to monitor political parties.

Mr. Sharma said the cause of action for his petition arose from this controversy. “This is a serious financial and life injury to the citizen of India. If it is not stopped and quashed it will be serious endanger to the whole society, livelihood and life of the citizen of India,” the petition said.

The petition also seeks the apex court’s intervention to respond to several questions of law like whether the Indian Constitution recognises the need for a political party membership for membership in the parliament and state legislative counsel and assembly?