Election Commission proposal on foreign funding prohibition is under government consideration

Election Commission has said its proposal to bring a law to prohibit electoral trusts from accepting funds from foreign sources is being actively considered by the government.

At present, electoral trusts can raise funds from foreign sources as they are not expressly prohibited under law. 

The Commission had recommended to the Finance and Law Ministries to make specific law prohibiting electoral trusts accepting funds from foreign sources so that they are not able to transfer the funds to political parties.

The issue came up for discussion at a recent meeting between the Election Commission and  the Law Ministry.

What is Electoral trust?

Electoral Trust is a Section 25 Company or a non-profit company created in India for orderly receipt of the voluntary contributions from any person and for distributing the same to the respective political parties, registered under Section 29A of the Representation of People Act, 1951.

The objective of the Electoral Trust is not to earn any profit or pass any direct or indirect benefit to its members or contributors. The sole objective is to distribute the contributions received by it to the political party concerned.

This is a mechanism for bringing transparency and sanity in the political party funding.

It is mandated that such electoral trusts have to be registered as a Section 25 Company and should bear the phrase “electoral trust” in its name. In the new Companies Act 2013.

Who can contribute ?

The electoral trusts can receive voluntary contribution from any company or individual for funding of Political parties.

No political party shall be eligible to accept any contribution from any foreign source defined under the Foreign Contribution (Regulation) Act, 2010.

Foreign contribution cannot be accepted by a candidate for election, member of any legislature, political party or office bearer thereof.

The political parties are required to submit a report on the contribution received in excess of Rs. 20,000/- from any person or company or entity to the Election Commission of India.

In case of an Indian company,any sum contributed by it in the previous year to any political party or an electoral trust shall be deductible from the income tax liability.

But no deduction shall be allowed in respect of any sum contributed by way of cash

Case study on political funding:

A report released by the Association for Democratic Reforms (ADR) on 2014 December  states that 29 out of 45 recognised political parties in India had not submitted the donation report to the Election Commission of India (ECI) till the deadline of November 30, 2014.

It further reveals that BJP is the only single party that has not submitted the list of donors contributing more than Rs 20,000 for the financial year 2013-14.

There was another report published by ADR last year, according to which, 75% of the funds to major political parties come from unknown sources. Also, out of all the known sources, 87% of the donations come from the corporate sector.

Another proposal by election commission:

The poll body said the Law Ministry has also agreed to another proposal to have multiple cut-off dates for citizens to enroll as voters.

As per the existing provisions, only a person who completes 18 years of age as on 1st January of the year is eligible to be enrolled in the electoral roll for that year.

A person turning 18 after January 1 has to wait till the next year for getting enrolled.

During the meeting other issues related to electoral reforms, EVM procurement and others also came up for discussion.

The Commission proposed that instead of only one qualifying date for enrollment, there should be 4 different dates (January 1, April 1, July 1 and October 1) for enrollment so that maximum number of people can be enrolled.

Law Ministry officials, quoting an opinion by then Attorney General late G E Vahanvati, said it may require amendment to Article 326 of the Constitution.