Tax sops likely for companies funding elections

The forthcoming Budget is likely to give tax exemptions to companies funding elections even as it would strive to eliminate exemptions in several other areas as part of tax reforms.

Official sources said necessary amendments would be made for this purpose in the Income Tax Act and they would be reflected in the Finance Bill 2002 that would be presented to the Parliament along with the Budget.

Tax relief is being provided to companies as part of the government efforts to move towards state funding of elections in a bid to eliminate black money.

Finance ministry is generally against the policy of tax exemptions as there is a tendency to 'misuse' them, particularly by the companies resulting in revenue leakage.

To plug this revenue loss, the government proposed to carry out large-scale reforms of both direct and indirect taxes.

Many of the exemptions might be rationalised including export subsidies and exemptions, particularly to charitable institutions, the sources said.

But in case of exemptions to companies funding elections an exception is likely to be made in the Budget as it is considered a step towards eliminating 'money power' in elections,

It would also be made mandatory for treasurer of political parties to submit to the Election Commission a detailed report on donations, failing which tax relief would not be provided.

PTI

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