Union Budget 2017: Cash Donations For Political Parties Now Capped At Rs 2,000

In an attempt to clean up the murky world of political party funding, the government has announced that donations in cash, currently allowed up to Rs 20,000 without explaining the source, will now be capped at Rs 2,000.

Finance Minister Arun Jaitley made the announcement as he shared the annual budget with parliament today.

After Prime Minister Narendra Modi announced the sudden cancellation of 500 and 1,000-rupee notes in November, parties were allowed to deposit the abolished bills in banks without paying taxes.  

A decades-old law exempts parties from taxes on a range of sources of income including donations by volunteers. Contributions of up to Rs 20,000 in cash did not have to be explained so far.

Election Commission officials and others have repeatedly highlighted that black money plays a huge role in elections and that parties attribute disproportionate parts of their funds to donations from volunteers. Parties are regularly accused of manufacturing lists of small volunteer donors to escape the scrutiny of tax officials.