Tightening the noose around unrecognised registered political parties for flouting rules, including those related to filing of contribution reports and indulging in "serious" financial impropriety, the Election Commission on Wednesday said it has initiated graded action against more than 2,100 such parties.
Sixty-six such parties claimed IT exemption in FY20 without complying with statutory requirements under the Representation of the People Act and 2,174 have not submitted contribution reports, the EC said.
"Action to be initiated against those receiving donations without due statutory compliances. Action initiated against three registered unrecognised political parties reported to be involved in serious financial impropriety. Eighty-seven non-existent RUPPs shall be deleted from the list and benefits under the Symbols Order (1968) withdrawn," the poll panel said in a statement.
There are 2,796 registered unrecognised political parties as in September, 2021, which is an increase of over 300 per cent since 2001.
The massive clean-up drive by the poll panel came days after Rajiv Kumar took over as the chief election commissioner on May 15.
Soon after Kumar had taken over as the financial services secretary, one of the first major decisions he took was to ask banks to flag shell companies deregistered by the Registrar of Companies and take appropriate action. Over 2.26 lakh shell companies were deregistered in 2017-18.
Subsequently, banks were also asked to ring-fence the cash flow of corporate borrowers and to ensure that their earnings are not diverted for other purposes to protect the interest of depositors.
The poll watchdog pointed out that out of 2354 RUPPs, over 92 per cent did not file their contribution report in 2019. 199 RUPPs claimed Rs 445 crore as IT exemption in 2018-19 and 219 RUPPs claimed Rs 608 crore IT exemption in 2019-20. Out of these, 66 have claimed income tax exemption without submitting contribution reports in Form 24A as mandated under section 29C of the Representation of the People Act.
It said 87 RUPPs have been found to be not in existence. In the 2019 Lok Sabha elections, out of 2354 RUPPs only 623 contested polls -- 70 per cent did not contest elections, it said.
EC said it has "noted with serious concern" that out of total 2796 RUPPs, a large number are neither taking part in the electoral process nor adhering to the one or several of the requirements -- which defeats the purpose of clean electoral ecosystem.
There are 87 RUPPs who have not informed EC about their change of address as required.
These parties have been found to be non-existent after a physical verification. The names of such non-existent RUPPs shall be deleted from the list of register of unrecognised registered political parties.
Any party aggrieved from this, can approach the concerned chief electoral officer within 30 days.
Three RUPPs which have been reported, prima facie, to be involved in serious financial impropriety such as incriminating documents related to bogus donation receipts, formation of shell entities, bogus and non-genuine purchases, facilitating accommodation entries, will be proceeded against under extant legal regime.
A reference will be sent to the department of revenue, who have reported misuse, for taking all necessary legal and criminal action.
The EC said it has been reported that income tax exemptions have been taken to the tune of Rs 445 crore in 2018-19 by 199 RUPPs and Rs 608 crore in 2019-20 by 219 RUPPs. Of these, 66 RUPPS have claimed income tax exemption without submitting contribution reports as mandated under law.
"In view of the fact that there are 2174 RUPPs which have not submitted contribution reports, the list shall be sent to the department of revenue for taking all consequential action."