The Hindu Business Line : Tax breaks for donations to political parties may be removed

Under scanner
Tax exemptions on agricultural income, leave travel allowance for salaried employees, sums including bonus received under a life insurance policy, payments from public provident funds/statutory provident fund or notified provident funds are under review.

New Delhi , May 17

Donations to political parties may become more expensive for Corporate India, with the Government indicating that the tax breaks available for such an activity may be removed.

Tax deduction on donation to political parties forms part of the list of 162 Sections of the income-tax law that are under the scanner of the Government for possible withdrawal of tax incentives that have been granted in the form of tax exemptions/deductions.

The Finance Ministry has now released this list of tax exemptions/deductions that are under review. All stakeholders have been asked to give their comments with supporting rationale for their removal or continuation by July 5. Also under the review are tax exemptions on agricultural income, leave travel allowance for salaried employees, sums including bonus received under a life insurance policy, payments from public provident funds/statutory provident fund or notified provident funds.

Other exemptions that are under the scanner include tax holidays given to IT sector, the minimum alternate tax exemption on SEZ units and developers, partner's share in total income of a firm, death-cum-retirement gratuity received by Government servants, gratuity received under the Payment of Gratuity Act and commutation of pension received from government or private employer/LIC fund.

An official release said the Government is committed to simplify the tax laws, minimise the distortions within the tax structure and broaden the tax base. In this context, tax incentives in the form of various exemptions and deductions are being reviewed, the release said.

Some tax experts felt that the Government was in a way seeking opinion for the introduction of exempt-exempt-tax (EET) system of taxation of savings instruments. "It may not be inappropriate to state that views are being sought for the introduction of EET system in case of certain situations without directly specifying so," Mr Aseem Chawla, Director-Taxation, Amarchand & Mangaldas, told Business Line.