Analysis of Contribution Report of Electoral Trusts for FY 2013-14

Introduction

The Central Government amended the Income Tax Rules, 1962 on the 31st January, 2013 to insert Rule 17CA which lists the functions of Electoral Trusts approved by the Central Bureau of Direct Taxes (CBDT). The Central Government, simultaneously, notified ‘The Electoral Trusts Scheme, 2013’ which specified the eligibility procedure and format for registration as an Electoral Trust. The amendment and the scheme were introduced for the registration of Electoral Trusts whose sole purpose was to fund registered political parties in a transparent manner. The notification can be accessed here.

The Election Commission of India (ECI) had circulated Guidelines for submission of contribution reports of Electoral Trusts on the 6th June, 2014 wherein instructions were issued to all the Electoral Trusts formed after January,’13 (hence approved by the CBDT), to submit an Annual Report containing the following details to the Commission apart from an audit report in the format specified in the amended rules, in the interest of transparency:

  1. Details of contributions received by the Electoral Trusts.
  2. Details of donations given by the Trust to political parties.

These guidelines were issued to 7 Electoral Trusts formed after January, 2013, and included Satya Electoral Trust, Pratinidhi Electoral Trust, People’s Electoral Trust, Progressive Electoral Trust, Janhit Electoral Trust, Bajaj Electoral Trust and Janpragati Electoral Trust. Of the above 7 Trusts, Satya Electoral Trust is the only Trust to submit its complete Annual Report to the ECI. Janhit Electoral Trust, Pratinidhi Electoral Trust and Janpragati Electoral Trust declared nil amounts received as donations during the FY 2013-14.

The following report of ADR/ NEW analyses the details of donors of Satya Electoral Trust and the contributions made by the Trust to political parties during FY 2013-14.

Executive Summary

Five National Parties, INC, NCP, BSP, CPI, CPM submitted their contributions statements, above Rs 20,000, for the FY 2013-14 to the ECI. BJP is the only  National Party which has not submitted its contribution report. While BSP declared nil income above Rs 20,000, the total income of the four National Parties from known sources of funding was Rs 76.93 crores. But the total donations declared by Satya Electoral Trust to National Parties amounts to Rs 81.87 crores (including donations to BJP).

  1. Format for submission of contributions report by the Electoral Trusts to the ECI

 

  1. The Electoral Trusts are required to submit the following 3 documents to the Election Commission of India:
  2. Annexure
  3. Part A – Basic information of the Electoral Trust
  4. Part B – Details of contributions received in the financial year
  5. Part C – Details of donations made by the Trust to political parties
  6. Part D – Verification by a person authorized by the Trust
  7. Audit report by a certified Chartered Accountant

iii.      Compliance certificates from Corporate donors

  1. List of Electoral Trusts formed after 31st January, 2013

Based on the information available with the Ministry of Corporate Affairs, a list of all Electoral Trusts formed after January, 2013 and approved by the CBDT is given below. Details of ownership of the Electoral Trusts were collected based on media reports and research on directorships in other companies.

 

S. No. Name of the Electoral Trust Company/ conglomerate which set up the Trust*
1 Janhit Electoral Trust Vedanta Group
2 Satya Electoral Trust Bharti Group
3 People’s Electoral Trust Reliance Group
4 Mahindra Electoral Trust Company Mahindra Group
5 Progressive Electoral Trust Tata Group
6 Paribartan Electoral Trust MP Birla Group
7 Bajaj Electoral Trust Bajaj Group
8 Triumph Electoral Trust Murugappa Group
9 Kalyan Electoral Trust Bharat Group
10 Janta Nirvachak Electoral Trust Kotak Group
11 Jagrut Electoral Trust Lodha Group
12 New Democratic Electoral Trust Mahindra Group
13 Samaj Electoral Trust Association KK Birla Group
14 Gauri Welfare Association Electoral Trust Jain Group
15 Sardar Vallabhbhai Patel Electoral Trust Sardar Vallabhbhai Patel Party (Political Party)
 
1 Pratinidhi Electoral Trust Not known
2 Reformative Electoral Trust of India Not known
3 Bhartiya Socialist Republican Electoral Trust Not known
4 Harmony Electoral Trust Not known
5 Jankalyan Electoral Trust Not known
6 Janpragati Electoral Trust Not known
7 Ambar Electoral trust Not known
8 Swadeshi Electoral trust Not known
9 Ashmita Electoral trust Not known

* Details of ownership of the Electoral Trusts were collected based on media reports, research on directorships in other companies and registration address of the company/ Trust

  1. Contributions received and disbursed by Satya Electoral Trust during FY 2013-14
  2. According to the rules formulated by the Central Government, Electoral Trusts are required to donate 95% of their total income to registered political parties in a financial year.
  3. Satya Electoral Trust received a total amount of Rs 85.406 crores from corporates and individuals and distributed Rs 85.37 crores (99.96%) to various political parties.

 

  1. Contributions made by Corporates

 

  1. Bharti Airtel Ltd. contributed the maximum amount of Rs 28 crores which formed 33% of total donations to Satya Electoral Trust followed by DLF Ltd. which donated Rs 20 crores and constituted 23% of total donations.
  2. Shri Akhil Gupta, Vice Chairman of Bharti Enterprises and Executive Chairman of Bharti Infratel Ltd. is the only individual to contribute to political parties through Satya Electoral Trust. He donated Rs 2 crores (2% of total donations to Satya Electoral Trust).

 

  1. Total contributions as a Group of Companies
  2. The parent companies of all the corporate donors have been termed as Group of companies and is not a part of the submission made by Satya Electoral Trust
  3. As Satya Electoral Trust was set up by the Bharti Enterprises, the parent company donated the maximum amount of Rs 36 crores to be disbursed to political parties and formed 42.16% of total donations to the Electoral Trust.
  4. Donations from other groups of companies include: Jubilant Bhartia Group – Rs 6.38 crores (7.47%); CK Birla Group – Rs 4.003 crores (4.69%); Interglobe enterprises – Rs 4.004 crores (4.69%) and KK Birla Group – Rs 2.002 crores (2.34%).

 

  1. Donations made by Satya Electoral Trust to Political Parties
  2. BJP, INC and NCP were the three National Parties to which Satya Electoral Trust made contributions.
  3. BJP was the recipient of the maximum amount of Rs 41.37 crores (48.44% of total donations to the Trust) followed by INC with Rs 36.50 crores (42.74% of donations to the Trust).
  4. SAD, RJD and J&KNC are the three Regional Parties to which the Trust made donations. SAD received Rs 2 crores and RJD received Rs 1 crore.
Name of the Political Party Total Donations disbursed to political parties (Rs. in crores) % of donations made from income of Trust
BJP 41.37 48.44%
INC 36.5 42.74%
NCP 4 4.68%
SAD 2 2.34%
RJD 1 1.17%
J&KNC 0.5 0.59%
Total donations Rs 85.37  crores 99.96%

 

  1. Direct donations made by the corporates to political parties
  1. Apart from the donations by corporates to Satya Electoral Trust, ADR/NEW analysed the donations by the same corporates who also donated separately to political parties between FY 2004-05 and 2013-14.
  2. National Engineering Industries Ltd. of C.K.Birla Group donated 5 times to INC and BJP between FY 2004-05 and 2012-13. The company donated a total amount of Rs 87.50 lakhs to BJP and Rs 1.875 crores to INC.
  3. It is to be noted that National Engineering Industries Ltd. donated Rs 1 crore to INC directly and Rs 2 crores to Satya Electoral Trust during FY 2013-14.
  4. GMMCO Ltd. is the only other corporate which donated to Satya Electoral Trust but had also made donations directly to political parties between FY 2004-05 and 2012-13. The company donated an amount of Rs 37.50 lakhs each to INC and BJP during FY 2009-10.

 

Name of the corporate Political party donated to* Amount of contribution Financial Year
National Engineering Industries Ltd. BJP Rs 37.50 lakhs 2009-10
BJP Rs 50 lakhs 2012-13
INC Rs 37.50 lakhs 2009-10
INC Rs 50 lakhs 2012-13
INC Rs 100 lakhs 2013-14
Total                         Rs 2.75 crores
   
GMMCO Ltd. BJP Rs 37.50 lakhs 2009-10
INC Rs 37.50 lakhs 2009-10
Total                             Rs 75 lakhs

*BJP has not submitted its donations report for FY 2013-14 hence donations from the above corporates for FY 2013-14 cannot be verified

 

Recommendations of ADR

  1. 6 Electoral Trusts had donated a total amount of Rs 105 crores to the National Parties between FY 2004-05 and 2011-12, before the transparency rules governing contributions to Electoral Trusts were formulated by the Central Government. As the rules are not retrospective, these 6 Electoral Trusts are not required to follow the transparency rules and declare their donor details. Thus, details of donors to these 6 Electoral Trusts remain unknown thereby leading to speculation on whether donations to these Trusts was only a means of getting tax exemption or a way to convert black money stashed in tax havens to white money in India.

 

Therefore details of donors of Rs 105 crores donated to political parties by the six Electoral Trusts which were formed before the CBDT rules came into existence, should also be disclosed. These Trusts include General Electoral Trust, Electoral Trust, Harmony Electoral Trust, Corporate Electoral Trust, Bharti Electoral Trust and Satya Electoral Trust. Also, the same rules which apply to those Trusts formed after 31st January, 2013, should also apply to the above mentioned Trusts so as to improve transparency.

 

  1. The names of Electoral Trusts, currently, do not indicate the name of the Company/ group of companies which set up the Trusts. In order to have greater transparency regarding details of corporates which fund political parties, it would be ideal to include the name of the parent company in the name of the Electoral Trust.

 

  1. Those Electoral Trusts which have not responded to and complied with the guidelines circulated by the ECI should be heavily penalized as indicated in the notification to the Trusts.

For detailed report on the donations received by Satya Electoral Trust and the contributions made by the Trust to political parties during FY 2013-14, kindly refer to the attached report.

Contacts

Media and Journalist Helpline

 

+91 80103 94248

Email: adr@adrindia.org

Maj Gen Anil Verma (Retd.)

Head

 

National Election Watch and Association for Democratic Reforms

 

+91 8826479910

anilverma@adrindia.org

 

Prof Jagdeep Chhokar

IIM Ahmedabad (Retd)

Founder Member National Election Watch, Association for Democratic

Reforms

+919999620944

jchhokar@gmail.com

 

Prof Trilochan Sastry

IIM Bangalore

Founder Member,

National Election Watch,

Association for Democratic Reforms

+919448353285,

trilochans@iimb.ernet.in

 

 

 

Association for Democratic Reforms

T-95A, C.L. House, 1st Floor,
(Near Gulmohar Commercial Complex)
Gautam Nagar
New Delhi-110 049

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