Daily Current Affairs : 27-February-2024

Recently, the Congress party made extreme allegations against the Income Tax Department. They claimed that the department advised banks to transfer over Rs. 65 crore from the party’s accounts. This action comes at a time when the Congress party is challenging a considerable tax demand of Rs. 210 crore.

Understanding the Income Tax Act

To grasp the situation better, we need to study the Income Tax Act, 1961, especially Section 13A. This section is crucial for political parties in India. Here are some key points:

  • 100% Exemption: Political parties can receive a full exemption on income from specific sources.
  • Conditions Apply: To benefit from this exemption, parties must adhere to certain conditions, which include:
    • Maintaining proper accounts
    • Undergoing regular audits
    • Reporting donations accurately

Filing Returns

Even with the exemption provided by Section 13A, political parties are still required to file income tax returns. Here’s how this works:

  • Income Threshold: If a party’s total income exceeds the exemption limit, they must file returns.
  • Responsibility of Leadership: The Chief Executive Officer (CEO) of the party is responsible for ensuring these returns are filed correctly.

The Current Situation

The Congress party’s allegations suggest that the Income Tax Department’s actions may have political motivations. The transfer of such a large sum amidst a tax challenge raises questions about fairness and transparency in the tax system.

Important Points:

  • Allegations by Congress Party: Claims that the Income Tax Department instructed banks to transfer over Rs. 65 crore from their accounts.
  • Pending Tax Demand: The transfer occurs amidst a challenge of Rs. 210 crore tax demand against the Congress party.
Understanding Section 13A of the Income Tax Act, 1961:
  • Exemption for Political Parties: Provides 100% exemption on income from specified sources.
  • Conditions for Exemption:
    • Must maintain proper accounts.
    • Required to undergo regular audits.
    • Must report donations accurately.
Filing Requirements:
  • Income Threshold: Political parties must file returns if their total income exceeds the exemption limit.
  • CEO Responsibility: The Chief Executive Officer (CEO) of the party is responsible for filing accurate income tax returns.
Current Implications:
  • Political Motivations: Allegations suggest potential political motivations behind the Income Tax Department’s actions.
  • Concerns about Transparency: The situation raises questions about fairness and transparency in the tax system.

Why In News

The Congress party alleged that the Income Tax Department instructed banks to transfer over Rs. 65 crore from its accounts, likening this action to a sudden storm that disrupts a calm sea, especially amidst their ongoing challenge of a Rs. 210 crore tax demand. This situation raises concerns about the fairness of the tax system, as it feels like being caught in turbulent waters during a crucial voyage.

MCQs about Congress Party’s Income Tax Controversy

  1. What did the Congress party allege regarding the Income Tax Department’s actions?
    A. They received a tax refund.
    B. They were instructed to transfer Rs. 65 crore from their accounts.
    C. They were granted additional tax exemptions.
    D. They filed a tax return successfully.
    Correct Answer: B. They were instructed to transfer Rs. 65 crore from their accounts.
    Explanation: The Congress party alleged that the Income Tax Department instructed banks to transfer over Rs. 65 crore from their accounts, indicating a conflict related to their tax situation.
  2. What is the amount of the tax demand that the Congress party is currently challenging?
    A. Rs. 65 crore
    B. Rs. 100 crore
    C. Rs. 210 crore
    D. Rs. 500 crore
    Correct Answer: C. Rs. 210 crore.
    Explanation: The Congress party is challenging a substantial tax demand of Rs. 210 crore, which highlights the ongoing financial dispute with the Income Tax Department.
  3. According to Section 13A of the Income Tax Act, what is required for political parties to qualify for tax exemption?
    A. They must avoid filing returns.
    B. They must maintain proper accounts and report donations.
    C. They need to be registered with the government.
    D. They should only receive funds from government sources.
    Correct Answer: B. They must maintain proper accounts and report donations.
    Explanation: To benefit from the 100% exemption under Section 13A, political parties must maintain proper accounts, undergo audits, and report donations accurately.
  4. Who is responsible for ensuring that political parties file their income tax returns?
    A. The party members
    B. The Chief Executive Officer (CEO)
    C. The Treasurer of the party
    D. The Income Tax Department
    Correct Answer: B. The Chief Executive Officer (CEO).
    Explanation: The Chief Executive Officer (CEO) of the political party is responsible for ensuring that the party files its income tax returns correctly, as stipulated in the tax regulations.

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