Big biz floats 14 trusts to channel poll funds
Mar 24 2014 , New Delhi
Eighteen years later, with the Lok Sabha polls set to begin next month, a clutch of India’s top-notch business houses have done precisely the same.
Tatas apart, giants like Reliance, Mahindras, Bajajs and others have set up least 14 electoral trusts for contributing funds to various political parties.
Companies are entitled to tax benefits against their electoral trusts subject to certain conditions.
The benefits can be availed only if a trust distributes 95 per cent of total contributions received in a particular financial year to registered political parties in the same year.
To ensure transparency, these entities are barred from receiving donations in cash. Foreign citizens are not allowed to contribute money to these trusts, which are required to take permanent account numbers (PANs) of all resident Indian donors and passport numbers in case of non-resident Indians while accepting contributions.
Being registered under a new framework that mandatorily requires the words ‘electoral trust’ in the name, the concept has been introduced to bring in more transparency into political funding activities.
According to data available with the corporate affairs ministry, 14 electoral trusts have been registered and the count is expected to rise, as many other companies have initiated the process of setting up such entities before the polls start for electing the 16th Lok Sabha.
Some of these trusts have decided to release funds to the political parties after the elections, while others are already believed to have made certain contributions.
Bharatiya Socialist Republican Electoral Trust, Bajaj Electoral Trust and Jankalyan Electoral Trust are among those already registered, according to data available with the corporate affairs ministry.
Tatas have established the Progressive Electoral Trust, while Reliance group has set up People’s Electoral Trust. Mining major Vedanta group of Anil Agarwal has registered the Janhit Electoral Trust. Bharti group has formed the Satya Electoral Trust while MP Birla group has incorporated the Paribartan Electoral Trust and K K Birla group the Samaj Electoral Trust Association.
The remaining five are Mahindra Electoral Trust Company, Pratinidhi Electoral Trust, Reformative Electoral Trust of India, Gauri Welfare Association Electoral Trust and Harmony Electoral Trust.
Names of many of these trusts do not identify with the businesses or corporate houses with which they are associated. In some instances, corporate houses and their trusts share common addresses.
Although business houses have been funding political parties for years, the idea of electoral trust is aimed at streamlining the process and ushering in transparency. The election commission has repeatedly focused on the perils of conducting elections under the shadow of illegal monies.
For political funding purposes, companies and other entities can register non-profit trusts, which would help differentiate them from other group firms.
The forthcoming polls, to be conducted from April 7 to May 12, are being watched keenly not only for the keen contest between BJP and Congress, but also for the presence of a new entrant, Aam Aadmi Party (AAP).
To facilitate the registration of electoral trusts, the corporate affairs ministry has amended its ‘name availability guidelines’. Electoral trusts are registered as non-profit ventures under Section 8 of the Companies Act.
Before this, these trusts could be set up under Section 25 of the Companies Act as per the tax department’s Electoral Trusts Scheme, 2013.