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Report No. 255

(b) On Disclosure

Relating to individual candidates

3. A new section 77A of the RPA has to be inserted requiring the candidates, or their election agents to maintain an account of the contributions received by them from their political party (not in cash) or any other permissible donor. The new section 77A reads as follows:

"77A. Account of contributions received.- Every candidate at an election shall, either by himself or by his election agent, also keep an account of the following particulars in respect of the donations or contributions received by the candidate after the date of notification of election, namely.-

(f) the amount of contribution received by the candidate from his party for the election;

(g) the amount of contribution received by the candidate fro.-

(i) any person;

(ii) any company, not being a government company

(h) the name, address and PAN card details, if applicable, of the donor in sub-clause (b) above;

(i) the nature of each contribution, in particular, whether it is:

(i) cash;

(iv) cheque; or

(v) gifts in kind;

(j) the date on which the contribution was received.

Explanation.- All contributions by a political party to its candidate shall be made by a crossed account payee cheque or draft or bank transfer."

4. Section 78 should also be amended in light of the proposed amendment to section 77A above, and the reference to more than one returned candidate should be removed. It should read as follows:

"78. Lodging of account with the district election officer.- (1) Every contesting candidate at an election shall, within thirty days from the date of election of the returned candidate lodge with the district election officer an account of his election expenses and contribution reports which shall be a true copy of the account kept by him or by his election agent under section 77 and section 77A respectively."

5. A new section 78A to be inserted in the RPA requiring the district election officer to make publicly available, on its website, all the expenditure and contribution reports submitted by every contesting candidate under section 78. Section 78A shall read as:

"78A. Disclosure of account submitted by contesting candidates.- (1) The district election officer shall make publicly available, on his website, the accounts of election expenses and contribution reports submitted by every contesting candidate or their election agent under section 78.

(2) The district election officer shall also keep these reports on file for three years after their submission and shall make them available for public inspection on the payment of a prescribed fee under Rule 88 of the Conduct of Election Rules, 1961."

Relating to political parties

6. Section 29C of the RPA has to be deleted. In its place, a new section 29C has to be inserted mandating political parties to maintain audited accounts, along the line of the 170th Report's recommended section 78A:

"29C. Maintenance, audit, publication of accounts by political partie.- (1) Each recognised political party shall maintain accounts clearly and fully disclosing all the amounts received by it and clearly and fully disclosing the expenditure incurred by it. The account shall be maintained according to the financial year. Within six months of the close of each financial year, each recognised political party shall submit to the Election Commission, its accounts, duly audited by a qualified and practicing chartered accountant from a panel of such accountants maintained for the purpose by the Comptroller and Auditor General.

(2) The Election Commission shall make publicly available, on its website, the audited accounts submitted by all political parties under sub-section (1).

(3) The Election Commission shall also keep these accounts on file for three years after their submission and shall make them available for public inspection on the payment of a prescribed fee."

7. The existing section 29C of the RPA has to be modified and recast as section 29D to first, include aggregate contributions from a single donor amounting to Rs. 20,000 within its scope; second, require parties to disclose the names, addresses and PAN card numbers (if applicable) of donors along with the amount of each donations; third, require parties to disclose such particulars even for contributions less than Rs. 20,000 if such contributions exceed Rs. 20 crore or twenty per cent of party's total contribution, whichever is less.. Consequential amendments will need to be made to the Election Rules and the IT Act. The proposed section 29D reads as:

"29D. Declaration of contribution received by the political parties.- (1) The treasurer of a political party or any other person authorised by the political party in this behalf shall, in each financial year, prepare a report in respect of the following, namely.-

(a) the contribution in excess of twenty thousand rupees, including an aggregate of contributions in excess of twenty thousand rupees, received by such political party from any person in that financial year;

(b) the contribution in excess of twenty thousand rupees, including an aggregate of contributions in excess of twenty thousand rupees received by such political party from any company, other than a Government company, in that financial year.

(2) Notwithstanding anything contained in sub-section (1), the treasurer of a political party or any other person authorised by the political party in this behalf shall, in the report referred to in sub-section (1), disclose the particulars of such contributions received from a person or company, other than a Government company, even if the contributions are below twenty thousand rupees, in case such contributions exceeds twenty crore rupees, or twenty per cent of total contributions, whichever is less, as received by the political party in that financial year.

Illustration.- A political party, 'P', receives a total of hundred crore rupees, in cash or cheque, in a financial year. Out of this amount, fifty crore rupees are received from undisclosed sources, by way of contributions less than twenty thousand rupees (in cash or multiple cheques). P shall be liable to disclose the particulars of all donors beyond twenty crores, even if they have contributed less than twenty thousand rupees each.

(3) The report under sub-section (1) shall be in such form as may be prescribed.

(4) The report for a financial year under sub-section (1) shall be submitted by the treasurer of a political party or any other person authorised by the political party in this behalf before the due date for furnishing a return of its income of that financial year under section 139 of the Income-tax Act, 1961 (43 of 1961), to the Election Commission.

Explanation.- For the avoidance of doubt, it is hereby clarified that the term "particulars" mentioned in this section shall include the amount donated; the names and addresses, and PAN card number if applicable, of such person or company referred to in this section."

8. A new section 29E to be inserted in the RPA requiring the ECI to make publicly available, on its website, all the contribution reports submitted by all political parties under section 29D. Section 29E shall read as:

"29E. Disclosure of contribution reports submitted by political parties.- (1) The Election Commission shall make publicly available, on its website, the contribution reports submitted by all political parties under section 29D.

(2) The Election Commission shall also keep these reports on file for three years after their submission and shall make them available for public inspection on the payment of a prescribed fee."

9. The Commission recommends giving statutory basis to the ECI's 'statement of election expenditure' requirement introduced pursuant to the Supreme Court's judgment in Common Cause v. UOI, AIR 1996 SC 3081, and its transparency guidelines pertaining to election expenses by political parties through a new section 29F, which states as follows:

"29F. Election expenses by political parties.- (1) Every political party contesting an election shall, within seventy five days of the date of an election to a Legislative Assembly of a State or ninety days of the date of an election to the House of the People, lodge with the Election Commission a statement of election expenditure, which shall be a true copy of such statement maintained by the party in consonance with the directions of the Election Commission.

(2) The payment of any election expenditure over twenty thousand rupees should be made by the political parties via cheque or draft, and not by cash, unless there are no banking facilities or the payment is made to a party functionary in lieu of salary or reimbursement."



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