Limits and disclosure requirement removed on political donations by corporations

Sushubh

Administrator
[OP]
Oct 29, 2004
413,890
12,773
Gurugram
Cash cloak for parties

The Narendra Modi government has drawn a veil of secrecy on corporate donations to political parties.

Finance minister Arun Jaitley slipped in a surprising amendment to the Companies Act, 2013, through a last-minute change in the Finance Bill, 2017, which removes the cap that barred a company from donating more than 7.5 per cent of its average net profit in the three immediately preceding financial years to a political party.

Worse, it also removed a requirement that made it obligatory for a company to disclose in its profit and loss statement the name of the party to which the donation has been made.

The Lok Sabha passed the Finance Bill along with a batch of 40 amendments that Jaitley introduced yesterday after a hurried debate.
"This means, for example, that an infrastructure firm could theoretically pay up to 50 per cent of its net profits to a single party as donation without anyone getting wiser as to which party has been paid... this throws open the possibility that an order to build a highway or a railway bridge could be given to a firm and that firm could pay the donation to the party in power which placed the order with it," said a senior official with the Comptroller and Auditor General's office.

"The beauty is that if this happens, it will be legitimate and no questions can be asked by any ethics committee of Parliament or by any CAG audit," the official added.

The "innocent" amendment made as part of others to the Finance Bill, 2017, is in Section 182 of the Companies Act, 2013. It says "in sub-section (I) - (a) the first proviso will be omitted".