The government has clarified that Rs 500 and Rs 1000 note deposits by political parties in their accounts will be tax exempt. Tax exemption implies that political parities’ as the only entities whose accounts are exempt from any scrutiny.
Revenue Secretary Hasmukh Adhia who is supposed to be the chief architect of the demonetisation drive said that bank accounts of political parties will be exempt as they are eligible for exemption from different types of taxes.
As per Section 13A of the Income Tax Act, 1961, income from house property and other sources, capital gains taxes etc. will not be applicable to political parties. Similarly, voluntary contributions to political parties from individuals also are exempted from taxation.
The Revenue Secretary was answering question whether government is investigating bank accounts of political parties.
Once demonetisation deposits by political parties are treated tax exempt, the underlying message is that there is no need for investigation into their accounts.