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Loophole in Demonetization Move? Are Political Parties having an easy Escape?

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People crowd the entry gate of a bank to exchange and deposit their old high denomination banknotes in Jammu, India November 15, 2016. REUTERS/Mukesh Gupta
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December 18, 2016: The day Prime Minister Narendra Modi announced the scrapping of Rs 500 and 1000 currency notes in order to unearth black money from the country at any cost it left a huge loophole that could make the entire exercise futile.

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•    The loophole is that of exempting the deposits made by political parties from I-T scrutiny and investigation. Well, this raises the question of the very intention of the Modi government.

•    When it comes to fighting black money why is there a difference in the way common man and political parties are dealt with? While common people are facing the harassment even when their money is legit, politicians are having an easy escape.

•    According to the Section 13A of the Income Tax Act, 1961, “Any income of a political party which is chargeable under the head ‘Income from house property’ or ‘Income from other sources’ or ‘Capital gains’ or any income by way of voluntary contributions received by a political party from any person shall not be included in the total income of the previous year of such political party”

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•  This gives the political parties the opportunity to collect the black money and not give any details about it. As according to the law, small donors, that is cash donations that come in, in less than Rs 20,000 can be anonymous.

•  According to the analysis by Association for Democratic Reforms (ADR) and National Election Watch shows about 75 % of the fund’s sources of the political parties remain unknown. And, that is the real problem.

•  The whole debate of transparency does not make sense when the political parties are exempted from it. It is that elephant in the room which no political leader wants to touch.

•   With the demonetization move, people expected things to change but unfortunately, it didn’t. Thus, the loophole remains, all the harassment faced by the common people will bear no fruit without this change.

•  Things became clear that the government doesn’t have the intention to touch that “loophole” part when Jaitley said, “Under Section 13A of IT Act 1961, political parties have to submit audited accounts, income & expenditure details, and balance sheets,”. He further added, “The legal and taxation regimes for all registered political parties remain as they were 20-25 years ago. Our government has not made any changes to these rules, nor are we planning to make any”.

•  Aam Aadmi Party raised the question as to why the government is not being transparent. Arvind Kejriwal also claimed in a press conference that theirs is the only party which is transparent and have the full details of all the bills, vouchers etc. However, the donor’s list is missing from the AAP’s website for past six months. A party which claims to be so transparent and accuses the other parties of being non –transparent is itself is also escaping from same.

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That being said, the double standard remains when it comes to fighting black money. The question remains the same why is it always that the common people suffer and the rich and powerful get away?

– by NewsGram team

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The Answer to The Impending Questions On Demonetization Are Here

While it did broaden the country’s tax base, it was a nightmare for the immense, cash-dependent informal economy.

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Indian Currency. Pixabay

Nearly all of the currency removed from circulation in a surprise 2016 attempt to root out illegal hoards of cash came back into the financial system, Resever Bank of India  has announced, indicating the move did little to slow the underground economy.

Prime Minister of India, Narendra Modi’s currency decree, which was designed to destroy the value of billions of dollars in untaxed cash stockpiles, caused an economic slowdown and months of financial chaos for tens of millions of people or demonetization.

Modi announced in a November 2016 TV address that all 500-rupee and 1,000-rupee notes, then worth about $7.50 and $15, would be withdrawn immediately from circulation. The banned notes could be deposited into bank accounts but the government also said it would investigate deposits over 250,000 rupees, or about $3,700. The government eventually released new currency notes worth 500 and 2,000 rupees.

 

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An activist of Congress party hold the banned 500 and 1000 rupee notes.

 

In theory, the decree meant corrupt politicians and businesspeople would suddenly find themselves sitting on billions of dollars in worthless currency, known here as “black money.”

“A few people are spreading corruption for their own benefit,” Modi said in the surprise nighttime speech announcement of the order. “There is a time when you realize that you have to bring some change in society, and this is our time.”

But even as the decree caused turmoil for those in India who have always depended on cash — the poor and middle class, and millions of small traders — the rich found ways around the currency switch. In the months after the decree, businesspeople said that even large amounts of banned currency notes could be traded on the black market, though middlemen charged heavy fees.

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Prime Minister Narendra Modi along with mayor, flickr

The reserve bank of India report said in its Wednesday report that 99.3 percent of the $217 billion in notes withdrawn from circulation had come back into the economy. Some officials had originally predicted that number could be as low as 60 percent.

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“Frankly, I think demonetization was a mistake,” said Gurcharan Das, a writer and the former head of Proctor & Gamble in India. He said that while it did broaden the country’s tax base, it was a nightmare for the immense, cash-dependent informal economy.

“You can’t overnight change that in a country which is poor and illiterate. Therefore, for me it’s not only an economic failure but a moral failure as well,” Das said. (VOA)