February 11, 2014, PTI
NEW DELHI: With the Lok Sabha polls drawing
near, the count of electoral trusts set up by companies to channelise
their political funding is on the rise and at least 10 such entities
have been registered, including those by Reliance, Tatas, Mahindras and
Birlas.
The trusts are being set up under a new framework
that provides tax benefits for funds extended by corporates to political
outfits. The norms require inclusion of the words 'Electoral Trust' in
the names.
Five of the 10 trusts were registered in the past
one month, according to data from the Corporate Affairs Ministry.While
the Tata conglomerate has set up the Progressive Electoral Trust, the Reliance group has established the People's Electoral Trust.
The K K Birla group has registered the Samaj Electoral Trust Association, while Anil Agarwal-led Vedanta has set up the Janhit Electoral Trust. The Bharti group has formed the Satya Electoral Trust and the MP Birla group has incorporated the Paribartan Electoral Trust.
Others registered are Reformative Electoral Trust of India (Delhi), Mahindra Electoral Trust Company, Gauri Welfare Association 'Electoral Trust' and Pratinidhi Electoral Trust.
Companies seem to be rushing to register the trusts
as the Lok Sabha elections are likely to be held in the next two to
three months.
Going by government officials and
executives at leading consultancy and legal firms dealing in corporate
affairs, more business houses plan to register electoral trusts.
Although the new structure has been put in place
with the aim of bringing greater transparency in the corporate funding
of political parties, most of the names of these trusts do not indicate
the business groups they're associated with.
Some trusts have shared their addresses and the names of directors with certain companies belonging to related groups.
While
business houses have made political donations previously, the
government notified an 'Electoral Trusts Scheme' last year to streamline
the process and bring in more transparency in the corporate funding of
election-related expenses by parties.
The scheme allows corporate and other entities to
register non-profit trusts to differentiate them from other group
companies with business interests.
To
facilitate the registration of electoral trusts, the Corporate Affairs
Ministry has amended its 'Name Availability Guidelines.'
The trusts are registered as non-profit ventures
under Section 8 of the Companies Act. Earlier, such companies could be
formed under Section 25 of the Companies Act, 1956, under the tax
department's Electoral Trusts Scheme, 2013.
Companies can get tax benefits only if they
distribute 95 per cent of the contributions received in a financial year
to registered political parties in that year itself.
The
electoral trusts are barred from accepting donations in cash. They are
required to take the Permanent Account Numbers of all resident Indian
contributors and the passport numbers of non-resident Indians when
accepting funds.
The trusts are not allowed to accept contributions from foreign citizens or companies.
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